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A colleague suggests that a 6 percent growth rate is too low for revenue profit, and cash flow growth beyond year 5. He suggests raising growth to 12 percent in the continuing-value period. If NOPLAT equals $26.6 million in year 6, return on new invested capital (RONIC) equals 15 percent, and the cost of capital equals 10 percent, what is the continuing value as of year 5? Is there an alternative model that would perform better? Explain.

Financial Management, Finance

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