apercent ofrevenuesforthepastfiveyears(0.66percent)
andmultipliedthisvaluebythechangeinrevenuesoverthe
lastyear($50.79 billion) to arriveatthe noncash working
capital change of $336 million. Finally, the normalized
change in debt of $333 million was estimated using the
currentbookvaluedebt-to-capitalratio(7.27percent)ofthe
total normalizedreinvestment (4,243+ 336).The resulting
normalized equityreinvestment is $4,246 million(4,243 +
336 −333).Dividingbythenoncashnetincomein 2004 of
$25,011millionyieldstheequityreinvestmentrateof16.98
percent.
8 ThecountryriskpremiumforChinawasestimatedusing
thedefaultspreadforChina(1percent)andtherelativeequity
market volatility (standard deviation of Chinese equities/
standard deviation of Chinese bonds) for China of 1.6.
9 Thismayseemlikeahighgrowthrateforthestablephase
butitisbeingestimatedinChineseyuan.Thehigherinflation
rate in that currency will make nominal growth higher.
10 Notethatwewouldstilladdthecurrentcashbalancetothe
value of equity in the operating assets. What cannot be
countedistheadditionalcashbuildupthatwilloccurbecause
thefirmispayingoutlessindividendsthanithasavailablein
FCFE.