标题: Conflicting formula for justified P/B [打印本页] 作者: Andreas42 时间: 2011-7-13 14:46 标题: Conflicting formula for justified P/B
1. Justified P/B = (ROE-r)/(r-g)
2. By using the residual income model, V(0) = B(0) + {(ROE - r) * B(0)}/ ( r-g)
==> V/B = 1 + (ROE - r)/ (r-g)
Related Question:
Century Scales has a required return on equity of 12% and is expected to grow indefinitely at a rate of 5%. The ROE that would justify a P/B of 2.14 is closest to?作者: ryanlb 时间: 2011-7-13 14:46
V (0) = B(0) + ..... + (RI(n)+ [RI(n+1)/(r-g)])/(1+r)^(n)
The r-g in the denominator is only the last part of the "to infinity and beyond" part of the numerator.
For just the simplest 1-stage RI, the formula would be:
V(0) = RI(1)/(r-g)
Edited 2 time(s). Last edit at Thursday, May 27, 2010 at 05:14PM by gjertsen.作者: smuggycfa 时间: 2011-7-13 14:46
Your formula for the RI model is incorrect, I'm pretty sure.
Edited 1 time(s). Last edit at Thursday, May 27, 2010 at 05:05PM by gjertsen.作者: eoin 时间: 2011-7-13 14:46
Justified P/B is (ROE-g)/(r-g). Stalla uses a subscript of 1 for ROE, not sure if we're supposed to grow it or not. Can anyone confirm?
NO EXCUSES作者: genuinecfa 时间: 2011-7-13 14:46
Justified P/B is (ROE-r)/(r-g), not (ROE-g)/(r-g).
There isn't a dividend or cash flow to grow. What did you want to grow, ROE?
No need to grow anything.作者: Sportsman 时间: 2011-7-13 14:46
no, P/B = (ROE-g)/(r-g)作者: kickthatcfa 时间: 2011-7-13 14:46
