I know this is in Equity Investments CFAI book , bt did not find it on casual search of Schweser: Lvl II style: Intrinsic P/E = (1-b)/(r-g) , or (dividend payout ratio )/( r-g) or in Lvl I style : ( substitute rr for b ) Intrinsic P/E= (1-rr)/(r-g) You don’t have to remember that horrible 1/r + FF*G formula , just remember the much simpler (1-rr)/(r-g) . If you’re asked for the Franchise P/E , you can always subtract 1/r from the above to get it Franchise P/E = Intrinsic P/E - ( 1/r ) = ( 1-rr)/(r-g) - (1/r)