am i the only bastard here that took the current EPS and divided it by the beginning period BV??? the answer yielded 1.78 dead on, which was choice b
Slash Wrote: ------------------------------------------------------- > am i the only bastard here that took the current > EPS and divided it by the beginning period BV??? > > the answer yielded 1.78 dead on, which was choice > b That isn’t right slash. The average ROE method, which was what was stated in the vignette, normalizes ROE by taking the average over the most recent business cycle. You then multiply the averaged ROE time the beginning BV to get the answer.
Do you remember what you did to get 31? that was my flat out guess answer. My “continuing RI” came out like 4 or 5 so 28 + 5 = 33 with 31 being the closest
me too— 2.12
mwvt9 Wrote: ------------------------------------------------------- > Slash Wrote: > -------------------------------------------------- > ----- > > am i the only bastard here that took the > current > > EPS and divided it by the beginning period > BV??? > > > > the answer yielded 1.78 dead on, which was > choice > > b > > > That isn’t right slash. > > The average ROE method, which was what was stated > in the vignette, normalizes ROE by taking the > average over the most recent business cycle. You > then multiply the averaged ROE time the beginning > BV to get the answer. but that’s what ROE is define as: E(t)/BV(t-1). i did take the average but i calculated the ROE for each year myself.
I wasted a ton of time on that ROE/BV question and put 2.12. Hope it was right.
Yeah, required was 17.1 percent (but that included the 4% inflation). They were able to pass through 3% of it, so their required was 14.1%.
I wish I had this question in Asia, they removed it from our version.
i now this is overthinking, but i too got the highest number, and i noticed that the second highest (1.81, i think) was exactly the same as current eps…and since the current roe was 5.45% which was lower than the average, no matter how you averaged the numbers they came out to be higher than 5.45 (by 100 bps most likely) and therefore the normalized had to be higher than 1.81, the only answer that fit the bill was 2.12.
I tried averaging all ROE’s …i didnt get a matching answer. When i averaged the last 4 yrs, i got a matching answer. Is there a rationale as to 4 or 5 years is a good number for the life of a business cycle ?
get set go, what was the matching answer you got?
Petetini… Honestly i dont remember … but could be 2.11 or 2.13 or some thing.
i got 1.78 from my method
isn’t intrinsic P/E = observed P/E + Franchise P/E ??
jhwang711 Wrote: ------------------------------------------------------- > isn’t intrinsic P/E = observed P/E + Franchise P/E > ?? nope. intrinsic PE = tangible PE + franchise PE
intrinsic P/E = Tangible P/E + Franchise P/E
that’s the worst…missing easy ones like that…
I missed the sunk costs one on Corp Fin / Capital Budgeting. I cant even believe how i said …prototype adds value …in NPV calculation.
I thought “base P/E” was given. Isn’t that the same as “static P/E”? For that reason I added my franchise P/E with it.