1. Based on the following regression whose output estimates the forward P/E ratio for the media industry, estimate the price for CanWest if it just announced earnings of $2.75 per share and has the following known characteristics: Beta = 1.3, Payout = 0.55, Earnings Growth = 0.07 (3 marks)

Regression Statistics
Multiple R	0.534936
R Square	0.286157
Adjusted R Square	0.195028
Standard Error	0.038288
Observations	54
	Coefficients	Standard Error	t Stat	P-value
Intercept	14.23657	2.41333	5.89914	0.000062
Beta	-0.10747	0.136177	-0.78923	0.433942
Payout	-0.61999	0.274706	-2.25693	0.028702
Earnings Growth	5.12223	2.45351	2.087717	0.04227

2. How reliable is this estimate and how do you know? (2 marks)
3. Describe a rational narrative in which a high P/E ratio suggests a good investment opportunity. (2 marks)
4. Describe a rational narrative in which a low P/E ratio suggests a good investment opportunity. (2 marks)
5. Why would the Price / Cash Flow ratio be more informative for high Beta companies during a recession than the Price / Earnings ratio? (1 mark)