Question: The constant-growth DCF formula is sometimes written as where BVPS is book equity value per share, b is the plowback ratio, and ROE is the

The constant-growth DCF formula

is sometimes written as

where BVPS is book equity value per share, b is the plowback ratio, and ROE is the ratio of earnings per share to BVPS. Use this equation to show how the price-to-book ratio varies as ROE changes. What is price-to-book when ROE = r?

DIV, Po

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