7/24/2019 Implied Roc Roe

1/2

Inputs

Enter your after-tax operating earnings (EBIT (1-t)) in your terminal year = 1035

Enter your free cashflo to firm in your terminal year = !50

Enter your perpetual groth rate= "#

Enter your cost of capital in perpetuity = $%35#

Output

&our rein'estment rate in perpetuity is = !%5"#

&our return on capital (euity) in perpetuity has to *e = 1"%53#

Just for your edification

If your return on capital = cost of capital+ your rein'estment rate oul, *e "%!#

7/24/2019 Implied Roc Roe

2/2

. If you are ,oing an euity 'aluation+ enter the net income

. If you are ,oing an euity 'aluation+ enter the //E

. If you are ,oing an euity 'aluation+ enter the cost of euity

. ith euity 'aluation+ return on euity = cost of euity