Question 5 (6 marks) One analyst is trying to estimate the growth rate for Spirit Co. for the following 5 years, and he has obtained the following information in the most recent financial year: EBIT $200 million Book value of capital $1000 million Capital expenditures $150 million Depreciation $80 million Change of non-cash working capital $20 million The tax rate has been always fixed at 30%. a) Estimate the expected growth rate for the next 5 years given both ROC and reinvestment rate will be unchanged. b) If ROC on new investments will immediately jump to 22% and ROC on existing investments will gradually improve to 22% over the next 5 years, estimate the growth rate on new investments, growth rate on efficiency, and total growth rate. Question 5 (6 marks) One analyst is trying to estimate the growth rate for Spirit Co. for the following 5 years, and he has obtained the following information in the most recent financial year: EBIT $200 million Book value of capital $1000 million Capital expenditures $150 million Depreciation $80 million Change of non-cash working capital $20 million The tax rate has been always fixed at 30%. a) Estimate the expected growth rate for the next 5 years given both ROC and reinvestment rate will be unchanged. b) If ROC on new investments will immediately jump to 22% and ROC on existing investments will gradually improve to 22% over the next 5 years, estimate the growth rate on new investments, growth rate on efficiency, and total growth rate