Interesting, that there should be an equilibrium condition among the three value fundamentals, – #g, #ROIC & #WACC.
The chart would be more familiar for economists.
to translate it:
r – #WACC
R- Average #ROIC
ROI – #Marginal ROIC
NI – Net #Investment
There is an optimal NI level, when Marginal #ROIC = #WACC, meaning that organization reached condition, where it is no more ease to find positive NPV projects. Very next project has lower #ROIC, but it is still reasonable to invest till #ROIC becomes same as #WACC.
Growth depends on the investment rate (Part of Earnings) and #ROIC, (g = IR*R). So, at the equilibrium point, #WACC defines optimal #NI, #ROIC and Growth… maybe…
Sourse of Chart:
Venture Capital & the Finance of Innovation
Andrew Metrick & Ayako Yasuda
Second Edition<\/p>","protected":false},"excerpt":{"rendered":"
Interesting, that there should be an equilibrium condition among the three value fundamentals, – #g, #ROIC & #WACC. The chart would be more familiar for economists.to translate it: […]<\/p>","protected":false},"author":12998525,"featured_media":1450,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_wpcom_ai_launchpad_first_post":false,"_eon_insights_quality":"","_eon_insights_decision":"","_eon_insights_destination":"","_eon_insights_merge_group":"","_eon_insights_required_changes":"","_eon_insights_start_order":0,"_eon_featured_insight":0,"_eon_insights_map_version":"","_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[774675955,20100,4438168,164077271,772049227],"tags":[],"eon_topic":[],"eon_learning_path":[],"eon_collection":[],"eon_level":[],"eon_content_type":[],"eon_source":[],"eon_idea":[784445688,784445691,784445697,784445692],"eon_framework":[],"class_list":["post-1448","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-venture-capital-the-finance-of-innovation-by-a-metrick-a-yasuda","category-growth","category-roic","category-vc-valuation","category-wacc-coc-structure","eon_idea-growth","eon_idea-roic","eon_idea-vc-valuation","eon_idea-wacc-coc-structure"],"yoast_head":"\n