Assume an analyst is evaluating a firm with $1,000 of book value of common equity and a cost of equity capital equal to 12 percent. Assume that the analyst forecasts that the firm will earn ROCE of 18 percent until year 2015, when the firm will start earning ROCE equal to 12 percent. The company pays no dividends and will not engage in any stock transactions. Use this information to complete the following table and calculate the firm's value-to-book ratio.
Definitions:
White-collar Crime
White-collar crime involves financially motivated, nonviolent crime committed by business and government professionals, typically involving fraud, embezzlement, or other forms of deception.
Businesspersons
Individuals engaged in commercial, industrial, or professional activities with the aim of generating profits through the provision of goods or services.
Offenses
Acts that are forbidden by law and subject to criminal or civil penalties.
Fifth Amendment
A provision in the U.S. Constitution that guarantees various rights related to legal proceedings, including the right against self-incrimination.
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