# Calculating PBV, P/E and growth duration.

1. Calculate the PBV of a constant growth company given the following information:

Net income = $285.385 (millions)

Book value of equity = $1,902.378 (millions)

Payout ratio = 40%

Expected growth rate = 6%

Beta = 1.2

Risk-free rate = 6%

Market risk premium = 4%

2. Calculate the P/E multiple of a firm given the following information:

Expected ROE = 12.5%

Expected retention ratio = 0.60

Stock price = $32.75

Beta = 1.2

Risk-free rate = 6%

Market risk premium = 4%

3. Calculate the growth duration of a Stock B given the following data:

P/E multiplier: Index = 22; Stock B = 34

Expected growth rate: Index = 0.04; Stock B = 0.12

Dividend yield: Index = 0.0235; Stock B = 0.0123

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Answer:

1) Given that,

Net Income = $285.385 (million)

Book value of equity = $1,902.378 (millions)

Payout ratio = ...

#### Solution Summary

This solution is comprised of a detailed explanation of how to calculate PBV, P/E and growth duration.