Terminal Value

NVIDIA Corporation

NVIDIA Corporation (NVDA)


Growth in perpetuity method:
Long-term growth rate
WACC (%) 17.28
Free cash flow (t + 1) 6,386.62
Terminal Value 48,092.04
Present Value of Terminal Value 21,674.71

Now that we’ve estimated the free cash flow generated over the five-year forecast period, we need to estimate the value of NVIDIA Corporation’s cash flows after that period (if we don’t include this, we would have to assume that NVIDIA Corporation stopped operating at the end of the five-year forecast period). To do so, we’ll determine the company’s terminal value.