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My WACC for the company I am using is 1.26% however the terminal growth rate is 2%. When I calculate I get a negative PV
My WACC for the company I am using is 1.26% however the terminal growth rate is 2%. When I calculate I get a negative PV of terminal. How do I avoid this? This is for the Nintendo company, I don't believe it is supposed to be a negative.
WACC 1.27% Growth Rate Sales NOPM NOAT NOA NOPAT Increase in NOA Free Cash Flow to Firm Discount Factor PV of Horizon Sum of Horizon PV of Terminal Total Firm Value Less NNO Less NCI Firm Equity Value Shares Outstanding Stock Value Per Share Discounted Cash Flow Model ($ millions) Reported 2021 $16,534 31.60% 1.30 $12,718 $5,225 $19,944 -$1,040,250 2022 12.90% $18,667 Horizon 2023 2024 $14,359 $16,211 $5,899 $6,660 2025 12.90% 12.90% 12.90% 2% $21,075 $23,794 $26,863 $27,400 $1,641 $1,852 $4,258 $4,807 $5,427 0.98746 0.97508 0.96285 $4,205 Terminal $18,303 $20,664 $21,077 $7,519 $8,489 $8,658 $2,091 $2,361 $6,128 0.95077 $4,688 $5,226 $5,826 $413 $8,245 WACC 1.27% Growth Rate Sales NOPM NOAT NOA NOPAT Increase in NOA Free Cash Flow to Firm Discount Factor PV of Horizon Sum of Horizon PV of Terminal Total Firm Value Less NNO Less NCI Firm Equity Value Shares Outstanding Stock Value Per Share Discounted Cash Flow Model ($ millions) Reported 2021 $16,534 31.60% 1.30 $12,718 $5,225 $19,944 -$1,040,250 2022 12.90% $18,667 Horizon 2023 2024 $14,359 $16,211 $5,899 $6,660 2025 12.90% 12.90% 12.90% 2% $21,075 $23,794 $26,863 $27,400 $1,641 $1,852 $4,258 $4,807 $5,427 0.98746 0.97508 0.96285 $4,205 Terminal $18,303 $20,664 $21,077 $7,519 $8,489 $8,658 $2,091 $2,361 $6,128 0.95077 $4,688 $5,226 $5,826 $413 $8,245Step by Step Solution
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