Boeing Company (NYSE: BA) has a current stock price of $ 49.86. It also has a P/B of 3.57 and book value per share of $ 13.97. Assume that the single - stage growth model is appropriate for valuing the company. Boeing’s beta is 0.80, the risk - free rate is 5.00 percent, and the equity risk premium is 5.50 percent.
A. If the growth rate is 6 percent and the ROE is 20 percent, what is the justified P/B for Boeing?
B. If the growth rate is 6 percent, what ROE is required to yield Boeing’s current P/B?
C. If the ROE is 20 percent, what growth rate is required for Boeing to have its current P/B?