Equity reading 44 page 518: How do we get to the equation P/B=(ROE-g)/(r-g) ? Thanks very much
Wow nvm it’s footnoted.
yeah, srsly, just memorize so that on the exam you can plug and chug. also, you should probly know this one: P/B = 1 + (RoE - r)/(r-g) mainly because it helps you remember this one: P = B + B(RoE-r)/(r-g)
P = D1/(r-g)=E1*(1-RR)/(r-g)=BV*ROE(1-RR)/(r-g)=BV*(ROE-g)/(r-g) since g = RR*ROE.