(Common stock valuation) Assume the following: the investor's required rate of return is 14.5 percent, the expected level of earnings at the end of this year (E1) is $10, the retention ratio is 30 percent, the return on equity (ROE) is 13 percent (that is, it can earn 13 percent on reinvested earnings), and similar shares of stock sell at multiples of 6.604 times earnings per share. e. What would happen to the P/E ratio (PIE1) and stock price if the company increased its retention rate to 80 percent (holding all else constant)? What would happen to the P/E ratio (P/E1) and stock price if the company paid out all its earnings in the form of dividends? f. What have you learned about the relationship between the retention rate and the P/E ratios? a. What is the expected growth rate for dividends? 3.9 % (Round to two decimal places.) b. What is the price earnings ratio (PIE,)? 6.604 (Round to three decimal places.) c. What is the stock price using the P/E ratio valuation method? $ 66.04 (Round to the nearest cent.) d. What is the stock price using the dividend discount model? $ 66.04 (Round to the nearest cent.)