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Assume the current Price - to - Earnings ( P / E ) ratio for Firm A is 2 0 , which is the same

Assume the current Price-to-Earnings (P/E) ratio for Firm A is 20, which is the same as the S&P 500 index. If Firm A is an average firm, what is the required rate of return? Additionally, if Firm A is not an average firm, and its current stock price is $100, with forward earnings per share of $5, a required rate of return of 10%, and a plowback ratio of 50%, what is the expected Return on Equity (ROE) for Firm A?

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