Major Indexes

Terminal Value

NVR Inc.

NVR Inc. (NVR)

26.23 (+0.81%)

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 7.13
Free cash flow (t + 1) 965.25
Terminal Value 30,838.67
Present Value of Terminal Value 21,854.46

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