P10-12 (similar to) Question Help (Related to Checkpoint 10.2) (Relative valuation of common stock) 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 earnings at the end of this year (E) is $8, the firm follows a policy of retaining 40 percent of its earnings, the return on equity (ROE) is 12 percent, and similar shares of stock sell at multiples of 8 334 times earnings per share Now show that you get the same answer using the discounted dividend model a. The stock price using the P/E ratio valuation method is $ 66.67. (Round to the nearest cent) b. The stock price using the dividend discount model is $ (Round to the nearest cent.) Enter your answer in the answer box and then click Check Answer. All parts showing Clear All Check