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  "notes": "Includes a specific mathematical example of a PE ratio calculation.",
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      "text": "Higher quality businesses/lower required capital reinvestment result in a higher surplus return",
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      "text": "These formulas restate a discounted cash flow calculation as a multiple",
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      "text": "Different valuation approaches using similar assumptions should give the same answer",
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      "text": "Excess return on capital: This is the difference between the return on capital and the weighted average cost of capital.",
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      "text": "P/E = .12-.05 / .12(.10-.05) * (1 - 1.05^10 / 1.10^10) + .09-.02 / .09(.08-.02) * 1.05^10 / 1.10^10 = 4.3 + 8.1 = 12.5x",
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      "text": "where ROELT = the long-term return on equity, COELT = the investor's long-term required return on equity and gLT = the long-term (steady state) growth rate.",
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      "text": "Valuation Multiples: A Primer",
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