Hi, typically justified price. book is (ROE - r)/(r - g). However, in one or two instances I have seen the formula as 1 + (ROE - r)/(r - g). Why is the one added?
Your first formula is incorrect (even after I added the parentheses). It should be:
(ROE − g ) / (r − g)
The second formula is the same as this: it’s just algebra.
Ok thanks!
My pleasure.