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What are the advantages of residual income valuation

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Reference no: EM133157784

Question -

1.  Why does ROE tend to exceed the cost of equity even at the terminal calculation period?

2. An analyst notes that using PE multiples is far more common than using residual income valuation. What are the advantages/disadvantages of residual income valuation compared to PE multiples?

Reference no: EM133157784

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