2. a. What are the determinants of Price-to-book ratio? (10 marks) b. Conglomerate Inc. is a company in three different businesses and its performance in each business for the most recent year is as follows (all figures are $ million). Interest Net income EBITDA 50 Business Steel Technology Financial Services Revenue 1,000 500 200 50 5 30 10 10 The company has $200 million in debt outstanding and no cash balance. The interest expense is allocated to each of the divisions based upon the debt of that division. There are 50 million shares outstanding. The median values for different multiples for comparable firms within each business are as follows: Median 5.00 Business Steel Technology Financial Services Multiple EV/EBITDA EV/Sales P/E 1.50 10.00 i. Assuming that each business of Conglomerate should trade at the median value for other companies in that business, estimate the value of equity per share in Conglomerate Inc. (8 marks) ii. What are the potential problems of the approach in (i) above? How could these problems be overcome in the relative valuation framework