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I am valuing a stock using a residual income model. The current book value of...

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Finance

I am valuing a stock using a residual income model. The current book value of the stock is $10. The company is expected to produce $2.00 of EPS next year and the dividend per share is $1.00. If the company's cost of equity is 10%, what are the expected residual earnings for next year?

1.

1.00
2.

0.90
3.

1.10
4.

0.00

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