Referring to residual income, PE can be expressed in terms of cost of equity capital, the present

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Referring to residual income, PE can be expressed in terms of cost of equity capital, the present value of expected changes in residual income, dividends, and earnings. Explain what a PE ratio of 11 implies about market growth expectations for a company with a cost of equity capital equal to 10%. Do the same analysis for a PE greater than 11 and less than 11.

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Financial Statement Analysis And Valuation

ISBN: 9781618532336

5th Edition

Authors: Peter D. Easton, Mary Lea McAnally, Gregory A. Sommers

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