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How to find b in growth model of gorden growth in FCF…
Re is cost of equity rightb is the proportion of profits retained (i.e. not paid out as dividend). You would find this by looking at the information about the accounts in the question.
Re is the return on investment of the retained earnings. If this is not ascertainable from the information in the question then we assume it to be the return on equity (which is the same as the cost of equity).
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