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Future Return on Book Equity Number of Years Returns Will Continue 5 Years 0.8 1.0 1.2 10 Years 0.7 1.0 1.3 20 Years 0.6 1.0 1.4 30 Years 0.6 1.0 1.5 Number of Years Returns Will Continue 5 Years 10 Years 20 Years 30 Years Number of Years Returns Will Continue 5 Years 10 Years 20 Years 30 Years 1.4 1.7 30% of Earnings are Reinvested 2.0 2.2 70% of Earnings are Reinvested 100% of Earnings are Reinvested In this exercise, we're varying both the ROE and the number of years that the company is in operation. For the top third of this chart - the 30% of earnings reinvested section - try answering these questions (we'll consider the whole chart in a moment). Where will the highest Market-to-Book Ratio be? Where will the lowest Market-to-Book Ratio be? And will any of the Market-to-Book Ratios be equal to 1? Make sure to specify the horizon and the ROE in each of your answers. This is tough, but give it your best shot.