• anonymous
Hi. Is fundamental growth (g = retention ratio x ROE, or g = reinvestment rate x nROE) nominal or real growth? I would say it is real, because ratios Net income/equity and retained earnigns/net income should not be effected by inflation. But if it is real, and I use it in my valuation, doesn't this contradict with using other inputs, that are nominal, for example risk free rate?
  • Stacey Warren - Expert
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  • chestercat
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  • anonymous
Nominal.. Because your ROE is based on nominal accounting numbers.

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