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3. Consider the following data on company Thor. BV = Book value per share 5.10 ROE = Return on equity 18.5% MP = Market price
3. Consider the following data on company Thor.
BV = Book value per share 5.10
ROE = Return on equity 18.5%
MP = Market price per share 26.29
Normal growth in EPS of 3.5%.
Required return on company Thor of 5.7%
EPS = Earnings per share 2.75
DPS = Dividends per share 1.25 (this is last year dividend or D0 )
3A. Calculate the price to book value P/B based on the fair value estimation model.
Would you buy or sell company Thor based on your calculation in 3A. Explain.
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