Lyondell Inc. is a conglomerate with a value-to-book capital ratio of 2.0. If the firm is in
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Lyondell Inc. is a conglomerate with a value-to-book capital ratio of 2.0. If the firm is in stable growth, expecting to grow 4% a year in perpetuity, and has a cost of capital of 10%, what return on capital is the market assuming in perpetuity for Lyondell?
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