Determining roe to yield projected pb

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Determining ROE to Yield Projected PB

Google recently had a market cap of $409.98 billion, total equity of $87.31 billion, and 336.05 million shares outstanding. At about the same time, the PB of Yahoo and eBay were 2.97 and 3.08 respectively. Assume that we desire a minimum 12% annual return on our investments, and that we believe Google will sell at 3.0 times book value five years from now. What must Google earn (ROE) on average over the next 5 years to make it a worthwhile investment?

(Assume that Google pays no dividends. Do not round until your final answer. Round your answer to one decimal place.)

Reference no: EM131623598

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