Assume earnings - Investment = cashflow

if investment = growth / ROIC

and a firm starts year 1 earnings at $100 and grows at 6% per year until year 15, with earnings growing in perpetuity beginning year 16 at a rate of 3%, what is the DCF valuation of this company at year 0?

Assume ROIC = 25%

Question

Assume earnings - Investment = cashflow

if investment = growth / ROIC

and a firm starts year 1 earnings at $100 and grows at 6% per year until year 15, with earnings growing in perpetuity beginning year 16 at a rate of 3%, what is the DCF valuation of this company at year 0?

Assume ROIC = 25%

anonymous · Answer

The answer is 2,100 ... BUT HOW DO YOU GET THAT !??!!?

anonymous · Answer

Also, WACC = .09