Problem $8-12$

Assume that a company has an ROE of $16$ percent, a growth rate of $5$ percent, and a payout ratio of $56$ percent. The company also has a cost of equity of $13$ percent.

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

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

$-$Select$-$

The trailing P$/$B Multiple is $0\mathrm{.}07.$

The trailing $\frac{P}{B}$ Multiple is $1\mathrm{.}12.$

The trailing $\frac{P}{B}$ Multiple is $1\mathrm{.}18$

The trailing $\frac{P}{B}$ Multiple is not forecast by analysts.