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Harrison1212
When I work out the growth rate of EBIT using Reinvestment rate * ROC, should I used the same rate of growth for all other aspects of the fcff equation. For example, Reinvestment Rate (60%) * ROC (16%) = Expected growth in EBIT 9.6% so; Year 1 Year 2 EBIT $9,221 9.6% 11,195 EBIT(1-t) $6,639 9.6% 7276 - Reinvestment $3,983 9.6% 4,366 = FCFF $2,656 9.6% 2,911
growth rate is equal to (retained earnings rate * roc) .. what do u mean by reinvestment here ? is t the capital expenditure that u mean ?