H Corp, which markets cleaning chemicals, insecticides and other products, paid dividends of $2.00 per share in 2020 on earnings of $4.00 per share. The book value of equity per share was $40.00, and earnings are expected to grow 6% a year in the long term. The stock has a beta of 0.85, and sells for $60 per share. The Treasury bond rate is 7%.
Based upon these inputs, estimate the price/book value ratio for H. and How much would the return on equity have to increase to justify the price/book value ratio at which H sells for currently?