| Comparable | Book equity | Market equity |
|---|---|---|
| Sughero | 600 | 720 |
| Plastica | 920 | 1012 |
| Corona | 450 | 585 |
Values are in millions. Alfa Closures has book equity 200, next-year earnings 24, payout 60% and equity cost 10%. A new project suspends dividends in years 1–3 and increases earnings 20% annually: 24, 28.8, 34.56 and 41.472 in years 1–4. From year 4, the previous payout and sustainable growth resume.
- A.Estimate equity using average market-to-book, then find forward P/E.
- B.Infer growth and ROE; assess value creation.
- C.Value the new project policy.