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Mexican Motors market cap is 150 billion pesos. Next years free cash flow is 9.0 billion pesos. Mexican Motors has generally earned about 12% on

Mexican Motors market cap is 150 billion pesos. Next years free cash flow is 9.0 billion pesos. Mexican Motors has generally earned about 12% on book equity (ROE = 12%) and reinvested 40% of earnings. The remaining 60% of earnings has gone to free cash flow. Suppose the company maintains the same ROE and investment rate for the long run.

What would be the rate of return?

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