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Estimate the firm reinvestment rate

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Question: Assume, in the previous example with Vernon Enterprises, that the firm will earn a return on capital of 15% in perpetuity.

a. If we assume that the firm is in stable growth, growing 5% a year forever, estimate the firm's reinvestment rate.

b. Given this reinvestment rate, estimate the value of the firm.

Reference no: EM131690384

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