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You are trying to estimate a growth rate for BigRedThreads, a clothing producer and distributor. The firm earned $60 million in after-tax operating income on
You are trying to estimate a growth rate for BigRedThreads, a clothing producer and distributor. The firm earned $60 million in after-tax operating income on capital invested of $600 million last year. In addition, the firm reported net capital expenditures of $30 million and an increase in noncash working capital of $15 million. Assuming the return on capital and reinvestment rate stay constant, estimate growth in operating income for next year.
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