Question
Determining PB Ratio for Companies with Different Returns and Growth Assume that the present value of expected ROPI follows a perpetuity with growth g (Value
Determining PB Ratio for Companies with Different Returns and Growth
Assume that the present value of expected ROPI follows a perpetuity with growth g (Value = Amount/ [r - g]). Determine the theoretically correct PB ratio for each of the following companies A and B. Note: NOPAT = NOA RNOA
| Company | Net Operating Assets | Equity | RNOA | ROE | Weighted Avg. Cost of Capital | Growth Rate in ROPI |
|---|---|---|---|---|---|---|
| A | $100 | $100 | 18% | 18% | 10% | 2% |
| B | $100 | $100 | 11% | 11% | 10% | 4% |
Round answers to two decimal places.
| PB Ratio | |
|---|---|
| Company A | Answer
|
| Company B | Answer
|
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Trillions How A Band Of Wall Street Renegades Invented The Index Fund And Changed Finance Forever
Authors: Robin Wigglesworth
1st Edition
0593087682,0593087690
