Calculate the Terminal Value
In this exercise, you are asked to calculate the present value of the Terminal Value using the Perpetuity with Growth formula. The FCFE projections for 2017 to 2021 are in the fcfe
object. The perpetuity growth rate of 3.0% (pgr
) and cost of equity of 11.55% (ke
) are stored in memory.
This exercise is part of the course
Equity Valuation in R
Exercise instructions
- Extract the 2021 FCFE value from the
fcfe
data object, which is the fifth element in the object. - Calculate the terminal value.
- Calculate the present value of the terminal value.
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
# Extract 2021 FCFE
fcfe_2021 <- ___
# Use perpetuity with growth formula to calculate terminal value
tv_2021 <- ___
tv_2021
# Calculate PV of Terminal Value
pv_terminal <- ___
pv_terminal