4. What is a reasonable level for the long-term P/E of a market under the following assumptions: economic book value = $500 billion, roe =

15%, cap rate = 9%, return on new investments = 18%, total investment in new businesses = $20 billion per year for the next 10 years?

How does the projected P/E change if the cap rate is 8% or 10%? How does the projected P/E change if total investment is

(a) $20 billion per year for 20 years?

(b) $300 billion per year for 20 years?

(c) $400 billion per year for 20 years?