Comparables Approach to Valuing Common Stock 10-12. (Using relative valuation for common stock) (Related to Checkpoint 10.2 on page 345) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: - The investor's required rate of return is 12 percent. - The expected level of carnings at the end of this year (E1) is $4.00. - The firm follows a policy of retaining 30 percent of its earnings. - The return on equity (ROE) is 15 percent. - Similar shares of stock sell at multiples of 13.3325 times earnings per khare. Now show that you get the same answer using the discounted dividend model