Assume that new biotechnology companies have an average P-E ratio of 600, and will grow to companies comparable to S&P 500 companies in 10 years. The companies in the S&P 500 have an average P-E ratio of 30. The discount rate (investors required rate of return), R = 0.10. 1 3. What is the markets forecast of return on equity, ROE, for new biotechnology com- panies? Is this a reasonable expectation?