Implied Return on Capital (ROC) & Return on Equity (ROE) Terminal Value

With the following inputs, compute your reinvestment rate and return on capital:

- after-tax operating earnings (EBIT (1-t)) in your terminal year

- free cashflow to firm in your terminal year

- perpetual growth rate

- cost of capital in perpetuity

Note: this model is being shared with the authorization of Professor Aswath Damodaran from NYU Stern Business School (www.damodaran.com)