Question
The book value of equity was $1100 million at the beginning of the year and the book value of debt was $1000 million. Assuming that
The book value of equity was $1100 million at the beginning of the year and the book value of debt was $1000 million. Assuming that the firm maintains its return on capital and reinvestment rate from the most recent year for the next 5 years, estimate the expected growth rate.
Assume now that analysts are projecting a change in the return on capital at Environ to 12% next year. If your reinvestment rate remains unchanged, estimate the expected growth rate next year. Your answer can be a decimal or a whole number. If you input a whole number, do not input the % symbol (input 5 instead of 5%).
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