Harry Trice wants to use the Gordon growth model to find a

justified P$/$E for the French company Carrefour SA $($NYSE

Euronext: CA$),$ a global food retailer specializing in

hypermarkets and supermarkets. Trice has assembled the

following information:

$$ Current stock price $=23\mathrm{.}84$

$$ Trailing annual earnings per share $=1\mathrm{.}81$

$$ Current level of annual dividends $=0\mathrm{.}58$

$$ Dividend growth rate $=3\mathrm{.}5$ percent

$$ Risk$-$free rate $=2\mathrm{.}8$ percent

$$ Equity risk premium $=4\mathrm{.}00$ percent

$$ Beta versus the CAC index $=0\mathrm{.}80$

$1.$Calculate the justified trailing and leading P$/$Es based on the

Gordon growth model

$2.$ Based on the justified trailing P$/$E and the actual P$/$E$,$ judge

whether CA is fairly valued, overvalued, or undervalued