#1) You are valuing a bank. The bank currently has assets of $305 per share. Five years from now (that is, at the end of five years), you expect their assets per share to be $455. After Year 5, you expect their assets per share to grow at 3.75 percent per year forever. The bank has a ROA of 2.0 percent and an ROE of 11.5 percent. The bank’s cost of equity is 10.5 percent. What is the value of the bank’s stock? Use the free cash flow to equity model to value this stock. Do not round intermediate calculations. Round your answer to the nearest cent.

#2) Problem 8-12 Assume that a company has an ROE of 14 percent, a growth rate of 5 percent, and a payout ratio of 55 percent. The company also has a cost of equity of 10 percent.

a. What is the forward price-book multiple? -Select-

b. What is the trailing price-book multiple? -Select-

Options for Part A #2:

The forward P/B multiple is…

Options for Part B #2:

The trailing P/B multiple is… Get Finance Help Today

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