EFTA Document EFTA01459754

8 February 2016 US Equity Insights Figure 46: Correct PC formula vs. commonly used `wrong" formula Incorrect Growth based fair PB: PB = Incremental real ROE - real growth Accumulated ROE PB = ROE -g Real COE • real growth • Real incremental ROE COE-g Steady-state based fair PB: Accumulated ROE ROE PO = Real COE PB = COE DPS Growth based fair PE: PE = COE - growth / EPS Steady-state based fair PE: 1 1 PE = real COE PE = COE UV C. Ch. &WM The commonly used