You are analyzing the pricebook value ratios for firms in the trucking industry, relative to returns on

Question:

You are analyzing the price–book value ratios for firms in the trucking industry, relative to returns on equity and required rates of return. The data on the companies is as follows:

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The Treasury bond rate is 7%, and the market risk premium is 5.5%.

a. Compute the average PBV ratio, return on equity, and beta for the industry.

b. Based on these averages, are stocks in the industry under- or overvalued relative to book values?

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Investment Valuation Tools And Techniques For Determining The Value Of Any Asset

ISBN: 9781118011522

3rd Edition

Authors: Aswath Damodaran

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Question Posted: May 23, 2024 05:03 AM

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You are analyzing the pricebook value ratios for firms in the trucking industry, relative to returns on

Question:

Company Builders Transport PBV ROE Beta 2.00 11.5% 1.00 Carolina Freight 0.60 5.5% 1.20 Consolidated Freight 2.60 12.0% 1.15 J.B. Hunt 2.50 14.5% 1.00 M.S. Carriers 2.50 12.5% 1.15 Roadway Services 3.00 14.0% 1.15 Ryder System 2.25 13.0% 1.05 Xtra Corporation 2.80 16.5% 1.10

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Investment Valuation Tools And Techniques For Determining The Value Of Any Asset

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