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Terminal Value

Texas Pacific Land Trust

Texas Pacific Land Trust (TPL)

Real Estate

Growth in perpetuity method:
Long-term growth rate
WACC (%) 13.17
Free cash flow (t + 1) 2,124.53
Terminal Value 23,168.27
Present Value of Terminal Value 12,480.65



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