Question: Determining ROE to Yield Projected PB Alphabet Inc., formerly Google Inc. recently had a market cap of $531.40 billion, total equity of $127.88 billion, and

Determining ROE to Yield Projected PB Alphabet Inc., formerly Google Inc. recently had a market cap of $531.40 billion, total equity of

$127.88 billion, and 687.27 million shares outstanding. At about the same time, the PB of Yahoo Inc.

and eBay Inc. were 1.451 and 5.686, respectively. Assume that we desire a minimum 12% annual return on our investments, and that we believe Alphabet will sell at 3.0 times book value five years from now.

What must Alphabet earn (ROE) on average over the next 5 years to make it a worthwhile investment?

(Assume that Alphabet pays no dividends.)

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