increases from its currentlevel of 6.23% in year 5 to the
industry average of 25% in year 10. The following table
summarizes the cost of capital by year:
Fortheterminal valuecalculations,weassumedthat Sirius
wouldearnareturnoncapitalof12%inperpetuity(setabove
thecostofcapitalof7.19%)andthatthestablegrowthrate
will be 4%.
ToestimatethevalueofSirius,weestimatethecashflows
during the high-growth phase: