Given the three EPS estimates in Problem 6, you are also given the following estimates related to the market earnings multiple:

a. Based on the three EPS and P/E estimates, compute the high, low, and consensus intrinsic market value for the S&P Industrials Index in 2013.
b. Assuming that the S&P Industrials Index at the beginning of the year was priced at 20,050, compute your estimated rate of return under the three scenarios from Part a

D E Nominal RFR Risk Premium ROE Pessimistic Consensus Optimistic 0.55 0.09 0.04 0.13 0.65 0.10 0.05 0.11 0.45 0.08 0.03 0.15