Example 5: Number of Units Sold - 40% Return on Equity (ROE) Target after 2 years from start of operations, December Y2.
Why this example?
This example refers to the analytical approach on the number of licenses to be sold to reach the ROE target at a set date, say, December Y2, working with cash flows and financial statements.
We are dealing with the case of the management action: increase of number of licenses. The objective is to obtain a ROE target at 24 months from starting operations.
The return on equity or ordinary shareholders’s funds (ROE) is obtained by
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