Question
Build a PB & PE Calculator using Fundamental Multiples with variable inputs for ROE, g & r ROE12.0%g3.0%r8.0%Use this Fundamental Multiple Calculator & estimate P/B
Build a PB & PE Calculator using Fundamental Multiples with variable inputs for ROE, g & r
ROE12.0%g3.0%r8.0%Use this Fundamental Multiple Calculator & estimate P/B & P/E for the following firms
rgCSXCSX railroad
8.4%2.5%FASTFastenal10.35%6.5%MPXMarine Products
8.0%4.0%Use the above discount rates & growth rates for each firm's fundamental multiple
You are responsible for calculating the rate of return on equity (ROE)
Obtain the most recent financial statements and estimate the following for each firm
Find net income for 2018
Find shareholders Equity (Book Value) for the end of 2017 (this is the beginning of 2018)
Calculate the fundamental P/B & P/E for each firm (given r, g & ROE)
Obtain the current P/B & P/E for each firm and compare them to the fundamental values
Find the percentage that the actual P/B & P/E are different from the fundamental value
Hint: current P/Es & P/Bs can be found on Yahoo Finance
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started