Mexican Motors$$ market cap is $100$ billion pesos. Next year$$s free cash flow is $9\mathrm{.}2$ billion pesos. Security analysts arMexican Motors' market cap is $100$ billion pesos. Next year's free cash flow is $9\mathrm{.}2$ billion pesos. Security analysts are forecasting that

free cash flow will grow by $8\mathrm{.}20\%$ per year for the next five years.

a$.$Assume that the $8\mathrm{.}20\%$ growth rate is expected to continue forever. What rate of return are investors expecting?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to $2$ decimal places.

b$-1.$Mexican Motors has generally earned about $10\%$ on book equity $($ ROE$=10\%)$ and reinvested $50\%$ of earnings. The remaining $50\%$

of earnings has gone to free cash flow. Suppose the company maintains the same ROE and investment rate for the long run. What will

be the growth rate of earnings?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to $1$ decimal place.

b$-2.$ What would be the rate of return?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to $2$ decimal places.e forecasting that free cash flow will grow by $8\mathrm{.}20\%$ per year for the next five years.

a$.$Assume that the $8\mathrm{.}20\%$ growth rate is expected to continue forever. What rate of return are investors expecting?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to $2$ decimal places.

b$-1.$Mexican Motors has generally earned about $10\%$ on book equity $($ROE $=10\%)$ and reinvested $50\%$ of earnings. The remaining $50\%$ of earnings has gone to free cash flow. Suppose the company maintains the same ROE and investment rate for the long run. What will be the growth rate of earnings?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to $1$ decimal place.

b$-2.$What would be the rate of return?