Question: Consider the table given below to answer the following question. The long-run growth rate is projected at 6% and discount rate is 10%. Year 1

Consider the table given below to answer the following question. The long-run growth rate is projected at 6% and discount rate is 10%. Year 1 2 3 4 5 6 7 8 21.21 9 10 Asset value 11.00 12.32 13.80 15.45 16.85 18.36 20.01 21.21 2.23 22.49 1.80 23.84 Earnings 1.32 1.48 1.66 1.85 2.02 2.11 2.20 2.23 1.27 1.80 1.35 1.91 Net investment 1.32 1.48 1.66 1.39 1.52 1.65 1.20 1.27 0.95 1.35 0.45 1.43 Free cash flow (FCF) 0.46 0.51 0.46 1.00 0.95 0.105 0.45 0.08 Return on equity (ROE) 0.12 0.12 0.12 0.12 0.12 0.115 0.11 0.06 0.105 0.06 0.08 0.06 0.08 0.06 Asset growth rate Earnings growth rate 0.12 0.12 0.12 0.12 0.12 0.09 0.12 0.09

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