You know that the fundamental P/E ratio could be expressed as follows: PR COE - g Po E Where PR = Payout ratio, the subscript 1 denotes the upcoming period and the subscript 0 denotes the current period. Po E - You are required to DERIVE another expression for the fundamental P/E ratio that is of extreme importance in real life analysis: 1 RR x (ROE - COE) COE COE x (COE-g) + Where RR = Retention ratio, the subscript 1 denotes the upcoming period and the subscript 0 denotes the current period. The 1/COE is known as the P/E multiple of a no-growth company and the second part of the equation is the growth multiple. Hint: Make use of the mathematical fact that 1/COE - 1/COE = 0.