Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Google recently had a market cap of $199 billion, total equity of $19.6 billion, and 302 million shares outstanding. At about the same time, the
Google recently had a market cap of $199 billion, total equity of $19.6 billion, and 302 million shares outstanding. At about the same time, the PB of Yahoo and eBay was 4. Assume that we desire a minimum 12% annual return on our investments, and that we believe Google will sell at 4 times book value five years from now. What must Google earn (ROE) on average over the next 5 years to make it a worthwhile investment? (Assume that Google pays no dividends.) Do not round until your final answer. Round final answer to one decimal place (ex: 0.2345=23.5% ). %
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