Firm value based approach- illustration Current year Revenue: INR 500 crores
Earnings before Interest and after Tax (EBIAT) or Net Operating Profit after Tax (NOPAT): 10%

Present investment in WC: zero
Present Growth rate in operating income: 5%
Current cost of capital: 15%
Cost of Capital drops by 0.10% for every 10% increase in WC/Revenue
Growth rate in revenue and EBIAT: 6%,6.5% ,6.83% and 6.93% when WC/Rev is 10%,20% , 30% and 40% respectively.
Ignore delta capex depreciation and amortization. What is the optical WC/Rev % (0%,10%,20%,30%,40%) calculations required for all

Answer rating: 100% (QA)

SlNo WC 0 10 20 30 40 i Cost of capital Current cost of capital001WC 15 1490 ... View the full answer