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

Compute the ROC or ROE implied in your terminal value calculation

financereinvestmentreturn on capitalreturn on equityrocroeterminal 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 (

This business tool includes
1 Excel Model File, 1 ReadMe

Prof. Aswath Damodaran offers you this business tool for free!

Download for free


Further information

The objective of this model is to get the following outputs:

- reinvestment rate in perpetuity
- return on capital (equity) in perpetuity

- your reinvestment rate if your return on capital = cost of capital


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