Consider a company that pays out all its earnings. The required return for the firm is 13%.

a) Compute the intrinsic P/E if its ROE is 15%.

b) Compute the intrinsic P/E if its ROE is 20%.

c) Discuss why your answers to parts (a) and (b) differ or do not differ from one another.

d) Suppose that the companys ROE is 13%. Compute its intrinsic P/E value.

e) Would the answer to part (d) change if the company retained half of its earnings instead of paying all of them out? Discuss why or why not. (Hint: you need to discuss different scenarios for ROE)