Returnoncapital=7.

5%
Costofcapital=7.5%
GrowthrateinEBIT(1t)afteryear3=2.5%

EBIT(1t)foryear4=EBIT(1t)foryear3*(1+Growthrate)=$60.50*1.025=$62.0125

Growthrate=Reinvestmentrate*Returnoncapital
Reinvestmentrate=Growthrate/Returnoncapital=0.025/0.075=0.3333=33.33%

Terminalvalueatyearn
={EBIT(1t)foryearn+1*(1Reinvestmentrate)}/(CostofcapitalGrowthrate)

Terminalvaluetheendofyear3={$62.0125*(10.3333)}/(0.0750.025)
Terminalvaluetheendofyear3=$41.3417/0.05=$826.83

Hence,TheterminalvalueforCravath(attheendofyear3)=$826.83