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3. What is the principle assumption that allows an analyst to modify a residual earnings (RE)...

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Finance

3. What is the principle assumption that allows an analyst tomodify a residual earnings (RE) model to a residual operatingearnings (ReOI) model? In your answer, explain the primary benefitof a ReOI model over the RE model. (5 points)

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1 To understand why analysts modify a residual earning RE model to a residual operating earnings ReOI model let us identify the pros of a ReOI model over a RE model ReOI Net Profit After Tax t Weighted Average Cost of Capital Net Operating Asset t1 This equation    See Answer
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3. What is the principle assumption that allows an analyst tomodify a residual earnings (RE) model to a residual operatingearnings (ReOI) model? In your answer, explain the primary benefitof a ReOI model over the RE model. (5 points)

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