E6.10. A Normal P/E for General Electric? (Easy) In early 2008, General Electric (GE) shares were trading at $26.75 each. Analysts were forecasting $2.21 in EPS for 2008 and $2.30 for 2009. A dividend of $1.24 was indicated for 2008. Use a required return of 9 percent for the questions below. 2. What is GE's normal forward P/E? What was the P/E at which it traded?

b. The estimated abnormal earnings growth for 2009 indicates that GE's stock should be trading at about a normal P/E. Show this.