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That should provide a good sanity check, since the cap-weighted average of
the WACCs you estimate should come close to Siegel's constant for the US.
That's again contrary to theory, as most MBAs will come up with much
higher WACCs than 6.5% above inflation.


US inflation in the last 100 years has averaged a little under 3.5%

6.5% + 3.5% = 10%.

This would suggest then that a company deploying capital is destroying value on average if their ROE is less than 10%.

Most companies deploy capital as it is rare to see a company pay out 100% of earnings.

To give a margin to cover for accounting quirks and a general margin of safety, it would seem that requiring a sustainable ROE > 15% would be a sensible target.

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