Harry Trice wants to use the Gordon growth model to find a justified P/E for the French company Carrefour SA (NYSE Euronext: CA), a global food retailer specializing in hypermarkets and supermarkets. Trice has assembled the following information:

• Current stock price = €23.84.

• Trailing annual earnings per share = €1.81

• Current level of annual dividends = €0.58

• Dividend growth rate = 3.5 percent

• Risk-free rate = 2.8 percent

• Equity risk premium = 4.00 percent

• Beta versus the CAC index = 0.80 i. Calculate the justified trailing and leading P/Es based on the Gordon growth model.
ii. Based on the justified trailing P/E and the actual P/E, judge whether CA is fairly valued, overvalued, or undervalued.