Excess returns after year

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Loomis Capital is a boutique investment bank that reported a return on equity of 20% on its book equity of $100 million in the just-completed financial year. The beta for the bank is 1.20, the risk-free rate is 5.2%, and the risk premium is 4%. You assume that the current return on equity and cost of equity will continue unchanged for the next 10 years and that there will be no excess returns after year 10. The payout ratio for the firm is 30%.

Reference no: EM133166055

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