Is the second Book value variable suppose to be inside or outside of the brackets? If it is positioned inside, as it is in the second problem, this alters the final solution.
Is the second Book value variable suppose to be inside or outside of the brackets? If it is positioned inside, as it is in the second problem, this alters the final solution.
Doesn’t matter if the $4.00 is inside or outside the bracket. As long as you do (ROE -r)/(r-g) correctly and multiply by the book value appropriately, you should get the same answer either way. 
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Touche. For the value solution for both formulas, my final answer was $11.56, not $7.56. Did Kaplan forget to add the last $4?
The answer is indeed $7.56.
Ay mijo… 
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Finally, I see what I am doing wrong. I have ROE-g in the numerator when it should be ROE - r. Good grief…
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