Schweser has it as ROE-g/r-g, so does BSAS. But the schweser instructor told us that was a typo, and that it should be ROE-r/r-g, which makes more sense to me intuitively, but I don’t see it written that way anywhere else (I don’t have my CFAI books with me right now, so I can’t check there. Can’t someone pls clear that up for me?
I was thinking the exact same thing yesterday when going over the formulas. I can’t make sense of that formula. I would think it would be more along the lines of the RI model formula stating that excess return (roe-r) is what is increasing book value above investors required return.
it’s not a typo.