Question
XYZ Corp. is a manufacturing firm that is currently reporting after-tax operating income of $300 million. Tha firm has a return on capital of 25%
XYZ Corp. is a manufacturing firm that is currently reporting after-tax operating income of $300 million. Tha firm has a return on capital of 25% and reinvests 30% of its earning back into the firm for the next 6 years.
- Calculate the expected growth rate for the next 6 years ?
- If after 6 years the growth rate is expected to drop to 4% and the return on capital is expected to stay at 25% . Calculate the terminal value in year 6 ?
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Fundamentals of Multinational Finance
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
5th edition
205989756, 978-0205989751
