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    Calculating PBV, P/E and growth duration.

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    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 = ...

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

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