Market assuming for the company in perpetuity

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State News Insurance company has a market value of equity of $ 1.8 billion and is expected to report net income of 1.5 billion next year. The firm is in stable growth and is expected to grow 4% a year in perpetuity, with a cost of equity of 10%. Assuming that the market is pricing this stock correctly, what return on equity is the market assuming for the company in perpetuity?

Reference no: EM131886285

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