P/E Model and Cash Flow Valuation Suppose that a firm's recent earn- ings per share and dividend per share are $2.75 and $1.60, respectively. Both are expected to grow at 9 percent. However, the firm's current P/E ratio of 23 seems high for this growth rate. The P/E ratio is expected to fall to 19 within five years. Compute a value for this stock by first esti- mating the dividends over the next five years and the stock price in five years. Then discount these cash flows using an 11 percent required rate. (LG5, LG7)