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Terminal Value

Transdigm Group Incorporated Inc.

Transdigm Group Incorporated Inc. (TDG)

Industrials

Growth in perpetuity method:
Long-term growth rate
WACC (%) 8.77
Free cash flow (t + 1) 2,696.64
Terminal Value 56,533.27
Present Value of Terminal Value 37,132.87



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