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LOS g: Calculate an implied growth rate in residual income given the market price-to-book ratio and an estimate of the required rate of return on equity.
Q1. An investor is considering the purchase of Robust Econometrics, Inc., which has a price-to-book (P/B) value ratio of 4.50. Return on equity (ROE) is expected to be 14%, the current book value per share (BVPS) is Sf22.50, and the cost of equity is 12%. The growth rate implied by the current P/B ratio is closest to:
A) 12.57%.
B) 11.43%.
C) 8.00%.
Q2. An analyst is considering the purchase of Rylinks, Inc., which has a price to book value (P/B) ratio of 6.00. Return on equity (ROE) is expected to be 13%, current book value per share is $13.00, and the cost of equity is 11%. What growth rate is implied by the current P/B rate?
A) 0.40%.
B) 11.00%.
C) 10.60%.
Q3. An investor is considering the purchase of Microscopics, which has a price to book value (P/B) ratio of 4.00. Return on equity (ROE) is expected to be 12%, current book value per share is $12.00, and the cost of equity is 10%. What growth rate is implied by the current P/B rate?
A) 9.33%.
B) 10.00%.
C) 0.67%.
Q4. An analyst is considering the purchase of Delphos Machinery, which has a price-to-book value (P/B) ratio of 8.00. Return on equity (ROE) is expected to be 14%, current book value per share is $12.00, and the cost of equity is 11%. What growth rate is implied by the current P/B rate?
A) 8.43%.
B) 10.57%.
C) 11.00%. | 
发表于 2009-3-9 18:01
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