Corp fin- how to calculate terminal value for this project?
Project- Establishing a chloromethane plant in Gujrat,India
Cost of debt 8%
After tax cost of debt 6%
Cost of Equity 13%
WACC 7.8%
Cash Outflow Year 1- (150)
CF Year 2- 0
CF Year 3- 18
CF Year 4- 24
CF Year 5- 39
CF Year 6-39
CF Year 7-39
The plant life is 20 years. If I have to calculate the NPV, how to find the terminal value from year 6?
If the plant has a life of 20 years, there is no point in calculating a terminal value. Terminal value assumes that the cash flows will be produced in to perpetuity.
Forecast the cash flows out for 20 years and discount those to calculate your NPV.
Ullam numquam id omnis aliquid enim nostrum. Ex modi porro aut ut. Ipsum dicta deleniti facilis placeat maiores nam inventore. Et occaecati perspiciatis earum ab quia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...