Question
An investor is considering the purchase of Capital City Investments which has price-to-book value of 5.00. ROE is expected to be 18%, and the market
An investor is considering the purchase of Capital City Investments which has price-to-book value of 5.00. ROE is expected to be 18%, and the market price per share is 25.00. Growth is expected at a rate of 8%. Assume shares are currently priced at their fair value.
What is the cost of equity implied by the current P/B ratio?
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The Complete Personal Finance Handbook
Authors: Teri B Clark
1st Edition
160138047X, 978-1601380470
