becomezero,andthatthetaxratewillapproachtheEuropean
Union marginal tax rate of 33%:
Afteryear5,wealsoassumethatthegrowthrateinoperating
income willdrop to3.41%(therisk-freerate)and thatthe
excessreturnsarepredictedtoapproachzero.Thereturnon
capitalwillthereforebeequaltothecostofcapitalof6.57%,
and the reinvestment rate in stable growth is 51.93%:
To estimate the value of Titan Cement, we begin by
estimatingthefreecashflowstothefirmeachyearforthe
high-growth phase, using a growth rate of 5.49% and a
reinvestmentrateof28.54%(moneyamountsinmillionsof
euros):
Toestimatetheterminalvalue,weestimatethecashflowsto
thefirminyear 6 andapplythestable-periodcostofcapital
and growth rate to it: