Value/BV Ratios and Return Spreads
Value/BV Ratios and Return Spreads
Value/BV Ratios and Return Spreads
5.00
4.50
4.00
Value/BV Ratio
3.50
3.00
WACC=8%
2.50
WACC=10%
WACC=12%
2.00
1.50
1.00
0.50
-2%
-1%
0%
1%
2%
3%
4%
5%
ROC - WACC
Page 1
6%
7%
8%
9%
10%
Input
Inputs
ROC
WACC
g
11%
12%
5%
Output
Value/BV
0.857142857
ROC-WACC
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
WACC=8%
0.33
0.67
100%
133%
167%
200%
233%
267%
300%
333%
367%
400%
433%
Page 2
WACC=10%
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2.2
2.4
2.6
2.8
3
WACC=12%
0.71
0.855
1
1.145
1.29
1.435
1.58
1.725
1.87
2.015
2.16
2.305
2.45