The P / E ratio for the S&P 5 0 0 describes the value of the index divided by the earnings of the company in the index, weighted according to market capitalization. The P / E ratio changes over time for two reasons: Multiple Expansion: Investors are willing to pay a higher price for the same level of earnings. Earnings Growth: Firms increase their earnings by reinvesting into and growing their business. Find below a table of the price levels and earnings per share of the S&P 5 0 0 index. a ) For each year, compute the earnings growth rate, i . e . , the change in EPS year over year. b ) For each year, compute the P / E ratio of the S&P 5 0 0 index