What will be start-ups ratio of market value to book value

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Reference no: EM131011255

Start-Up Industries is a new firm that has raised $320 million by selling shares of stock. Management plans to earn a 20% rate of return on equity, which is more than the 12% rate of return available on comparable-risk investments. Half of all earnings will be reinvested in the firm. a. What will be Start-Up’s ratio of market value to book value? (Do not round intermediate calculations.) Market-to-book ratio n/r incorrect b. What will be Start-Up’s ratio of market value to book value, if the firm can earn only a 4% rate of return on its investments? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131011255

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