10.6 bv - continuing value formula A colleague argues that...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
CH 10. 6 Superior Co earns a return on invested capital of 20% on its existing stores. Given intense competition for new store sites, you believe new stores will only earn their cost of capital. Consequently, you set return on new capital (8%) equal to the cost of capital (8%) in the
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: continuing value formula. A colleague argues that this is too conservative, as Superior Co will create value well beyond the forecast period. What is the flaw if your colleague’s argument...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online