Answer:
1.56
Explanation:
Calculation for the market-to-book value
First step is to calculate for the P/E ratio
P/E ratio=1/12
P/E ratio= 0.0833
Now let find the market-to-book value using this formula
Market-to-book value = ROE percentage/P/E ratio
Let plug in the formula
Market-to-book value=0.13/0.0833
Market-to-book value= 1.56
Therefore the Market-to-book value will be 1.56
The market to book value is 1.56.
ROE = Net income ÷ Book Value of shareholders equity
P/E = (Price per share ) ÷ (EPS per share)
or P/E = Market Capitalization ÷ Net Income
So,
12 = Price ÷ Net Income
Price = 12 Net Income-------------Equation 1
Now
0.13 = Net Income ÷ Book Value of shareholders equity
Book Value = Net Income ÷ 0.13----------------Equation 2
Now
Market/ Book Value = 12 Net Income ÷ Net Income/0.13
= 12 × 0.13
= 1.56
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