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

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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
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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 colleagues argument...
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