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Suppose you are estimating a growth rate of FCF within the corporate value model. For the past 5 years, you have calculated the growth rates

Suppose you are estimating a growth rate of FCF within the corporate value model. For the past 5 years, you have calculated the growth rates of revenues, operating income, NOPAT, operating capital, and FCF for the past 5 years as shown below.

Growth rates
Revenue 15%
NOPAT 21%
Operating Capital 25%
FCF -20%

You noticed that the firms FCF has been declining in the past five years while its NOPAT and operating capital have been steadily increasing over the same time period. 1) What could be the reason for the decline in FCFs, and 2) what can you say, in general, about the future FCF growth rate?

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