Reading 38 - Equity concepts and techniques

Hey everyone, I’m working on example # page 192 of book 4. I have a question. For the tangible P/E, the book solves it as 1/r However, previously in the reading, it says that the only times we solve p/e as 1/r is when b=o or when roe=r. Am I missing something here? Thanks! :slight_smile:

Also, for example 4 pg 195 the P/E for company B is given as 1/ (r+ flow through inflation rate x I) shouldn’t it be : 1/ (r-i + inflation flow through rate X I) as shown in equation 8 from pg 193?

rtq -is it nominal or real rate provided. if real, the -i part is not reqd.

great thanks! I had figured it out by then … but … you can’t edit your posts! Oh well, I hope someone learns from this Thanks CP :slight_smile: