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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(1t) $6,639 9.6% 7276
 Reinvestment $3,983 9.6% 4,366
= FCFF $2,656 9.6% 2,911
 one year ago
 one year ago
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(1t) $6,639 9.6% 7276  Reinvestment $3,983 9.6% 4,366 = FCFF $2,656 9.6% 2,911
 one year ago
 one year ago

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keenlearnerBest ResponseYou've already chosen the best response.0
growth rate is equal to (retained earnings rate * roc) .. what do u mean by reinvestment here ? is t the capital expenditure that u mean ?
 one year ago
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