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Could you please solve the problem below: Lucy Company has a current book value of $100. Lucy will have an ROE of 15% (on trailing
Could you please solve the problem below:
Lucy Company has a current book value of $100. Lucy will have an ROE of 15% (on trailing book value) and will pay out one-third of its earnings in dividends into the foreseeable future. The required return on equity is 10%. You calculate the residual income for the next two years (year 1 and year 2). What is the residual income for year 2? (Enter your answer to the nearest $0.01. Leave the $ sign off. In other words, if your answer is $55.55, enter 55.55 for your answer.)
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