 # how to calculate G rate given RI.

PB Ratio is 2.5X ROE = 13% BVPS \$8.00 Cost of Equity 11% calculate the growth rate implied by the current P/B ratio…

G= r - (B*(ROE-r)/MV-BV)

If you can’t rearrange the basic question, just try the 4 choices given and you’ll get your answer. No need to be a hero and memorize two equations.

If you know the basic formula of: V = BV + [BV*(ROE-r)]/(r-g) then you can plug in the other numbers and get g by simple algebra…from grade 9 in this question you have to claculate V by using P/B*B

i suck at algebra… do u know a site that can help me out to teach me how to readjust the formula?.. my algebra skills are only limited to the spot rate forward rate etc stuffs… anything beyond that… im out…

Just plug and chug the answers like sponge said, no algebra required.

i know thats a method … but in the future… i still want to learn grade 9 algebra heheh~~

Pick a number in the middle. Plug it in and see if you get the correct value. If you missed you now know which way you need to adjust.

ahmadmaghfur Wrote: ------------------------------------------------------- > i know thats a method … but in the future… i > still want to learn grade 9 algebra heheh~~ Try this site: http://www.algebrahelp.com/

thanks!!! ill go through them after the xm 