KNOWLEDGE CHECK At its peak at the end of 1999, Microsoft had a market cap of $600B. PC sales were booming and most PCs ran on Microsoft software. Revenue was growing 30% per year. The P/E ratio peaked at nearly 80.0x in 1999. Looking at this chart, what happened in the subsequent 15 years? Earnings declined and this pushed the market cap down The decline in the P/E ratio more than offset earnings growth and this pushed the market cap down 3 The decline in the P/E ratio canceled out the decline in earnings and this pushed the market cap up Earnings grew and this pushed the market cap up RUUVIL Click to open/close chart to save current settings as default view MSET US Equity Save As Load Actions Graph Fundamentals Money Select Securities Add a Security Browse 22.0/40 0.51 204 00 Select Fields Add a Field> ENI / Profit Mkt Cap P/E Fields Ann 4006 168 Qu 144.8058 148 2006 108 20 2008- Varer 15.4563 88 10 Select Chart Layout Single Panel Panel Per Field O Panel Per Security Drag and drop lines to customize Dec 31 1999 Dec 31 2004 .68 Dec 31 2014 Dec 31 2009 to Hide side panel, 2