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Solving Growth (g)

This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.

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September 5, 2013 at 7:12 am #139877
evangeluv
Member
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Hi, can anybody help me with solving this algebra equation on growth? Tried a couple of ways but couldn’t get to the correct ans.
Formula: TMV = FCFF (1+g) / (WACC – g)
Stated ans for g = 0.0434
$763m = 63 (1+g) / (0.1296 – g)
September 5, 2013 at 8:28 am #139878
John Moffat
Keymaster
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Multiply both sides by (0.1296-g) :
763 (0.1296-g) = 63(1+g)
Multiply through:
98.8848 – 763g = 63 + 63g
Subtract 63 from both sides, and add 763g to both sides:
35.8848 = 826g
Divide both sides by 826 :
0.0434 = g
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