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You have been asked to examine a valuation done of Loden Construction, a real estate...

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Accounting

You have been asked to examine a valuation done of Loden Construction, a real estate and construction company. You have been provided with the income statement for the last year:
Revenues 1,000
- Operating Expenses 700
- Depr. & Amort. 100
= EBIT 200
In the valuation, the analyst has assumed a growth rate of 0.05 forever in revenues, operating income and depreciation, and assumed capital expenditures of $ 160 million (for next year). In addition, the analyst has assumed that non-cash working capital will be 0.26 of the change in revenues. (Tax rate =20%)
What is the reinvestment rate?

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