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.) Do not round until your final answer. Round final answer to one decimal place (ex: 0.2345 =23.5%). Answer%

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.) Do not round until your final answer. Round final answer to one decimal place (ex: 0.2345 =23.5%). Answer%

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...

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