Determining PB Ratio for Companies with Different Capitalization Assume that the present value of expected ROPI follows

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Determining PB Ratio for Companies with Different Capitalization Assume that the present value of expected ROPI follows a perpetuity with growth g (Value ???? Amount/

[r ???? g]). Determine the theoretically correct PB ratio for each of the following companies A and B.

Company Net Operating Assets Debt

(6% Rate) Equity RNOA ROE Weighted Average Cost of Capital Growth Rate in ROPI A . . . . . . . . . . . . . . $100 $ 0 $100 11% 11.0% 10% 0%

B . . . . . . . . . . . . . . $100 $60 $ 40 11% 18.5% 10% 0%

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Financial Statement Analysis And Valuation

ISBN: 9781618532336

5th Edition

Authors: Peter D. Easton, Mary Lea McAnally, Gregory A. Sommers

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Question Posted: Oct 25, 2024 05:00 AM

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Determining PB Ratio for Companies with Different Capitalization Assume that the present value of expected ROPI follows

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Financial Statement Analysis And Valuation

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