You are trying to estimate the terminal value for a firm at the end of year 5 . The firm is expected to have after-tax operating earnings of $250 million in year 6 and these earnings are expected to grow 4% a year in perpetuity. The firm is also expected to have a return on capital of 12% and a cost of capital of 10% in perpetuity. 1. Estimate the terminal value of the firm at the end of year 5 . 2. Estimate the terminal value of the firm at the end of year 5 , if the return on capital is expected to be 15% after year 5 . 3. Keeping the return on capital at 15%, estimate the terminal value if the expected growth rate after year 5 drops to 2% ? What if the expected growth rate drops to 0% ? 4. Assume again that the expected growth rate is 4%. Estimate the terminal value of the firm at the end of year 5 , if the return on capital is expected to be 10% after year 5 . What if the ROC is expected to be 8% ? 5. Keeping the return on capital at 10%, estimate the terminal value if the expected growth rate after year 5 drops to 2% ? What if the expected growth rate drops to 0% ? 6. What did you learn from these calculations about the relationship between value and ROC