Currently, the dividend-payout ratio (D/E) for the aggregate market is 60 percent, the required return (k) is 12 percent, and the expected growth rate for dividends (g) is 3 percent. Round your answers to two decimal places.

1. Compute the current earnings multiplier.

2. You expect theD/Epayout ratio to decline to 50 percent, but you assume there will be no other changes. What will be theP/E?