Question
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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Mathematical Applications for the Management Life and Social Sciences
Authors: Ronald J. Harshbarger, James J. Reynolds
11th edition
978-1305108042
