Terminal Value

Texas Pacific Land Corporation (TPL)

$ 1530
38.01 (+2.55%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 20.19
Free cash flow (t + 1) 1,110.97
Terminal Value 6,862.11
Present Value of Terminal Value 2,736

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 Corporation’s cash flows after that period (if we don’t include this, we would have to assume that Texas Pacific Land Corporation stopped operating at the end of the five-year forecast period). To do so, we’ll determine the company’s terminal value.