defour44

Just to beat a dead horse here, I thought I’d elaborate:
if you plug in values for ROE and r you could say that if r = 9.9% and ROE = 10%then your franchise PE = (1/.099) - (1/.10) = 10.10 - 10 or .10
So basically even though ROE  r, your franchise PE is only adding 10cents to your current price (which I would consider small, but that’s just my opinion).