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Growth forecast with no reinvestment

A terminal value uses FCF equal to NOPAT (no reinvestment) and growth of 5% forever. Which statement is true?

A.It is correct for any company with a positive NOPATB.It understates value, since reinvestment adds more cashC.It implies infinite returns on new capital; value is too highD.It is fine as long as the WACC stays above 5%

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Growth forecast with no reinvestment

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