You are valuing Michael Kors (KORS), which faces cyclical demand for its products. KORS shares closed at $37.92 on 2 March 2019. Following table shows EPS, Book Value per share and return on equity of KORS for the period 2014 - 2018. You believe that this time period reasonably captures average profitability of KORS.

2014 2015 2016 2017 2018

EPS 2.25 2.1 1.76 2.45 3.56

BVPS 5.67 7.43 8.35 10.22 11.92

ROE 32.70% 24.45% 2.40% 13.35% 24.00%

Calculate a normalized EPS for KORS based on the method of average ROE and the P/E based on normalized EPS.

1) Normalized EPS = 1.76; P/E = 21.55

2) Normalized EPS = 3.56; P/E = 10.65

3) Normalized EPS = 2.42; P/E = 15.64

4) Normalized EPS = 2.31; P/E = 16.41