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>\n","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: r – #WACCR- Average #ROICROI – #Marginal ROICNI – Net #Investment There is an optimal NI level, when Marginal #ROIC = #WACC, meaning that organization reached condition, […]<\/p>\n","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":"","_crdt_document":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_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":[15122,774675955,20100,4438168,164077271,772049227],"tags":[],"class_list":{"0":"post-1448","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-sources","8":"category-venture-capital-the-finance-of-innovation-by-a-metrick-a-yasuda","9":"category-growth","10":"category-roic","11":"category-vc-valuation","12":"category-wacc-coc-structure","14":"fallback-thumbnail"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/eoninvestment.com\/wp-content\/uploads\/2024\/05\/1705387029959.jpeg?fit=800%2C618&ssl=1","jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pQZ85-nm","_links":{"self":[{"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/posts\/1448","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/users\/12998525"}],"replies":[{"embeddable":true,"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/comments?post=1448"}],"version-history":[{"count":6,"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/posts\/1448\/revisions"}],"predecessor-version":[{"id":2625,"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/posts\/1448\/revisions\/2625"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/media\/1450"}],"wp:attachment":[{"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/media?parent=1448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/categories?post=1448"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/eoninvestment.com\/ka\/wp-json\/wp\/v2\/tags?post=1448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}