5-BIG TECH Inc. sells at $40 per share, and its latest 12-month earnings were $8 per share, of which $3.20 per share were paid as dividends.

a. What is Big Techs current P/E ratio?

b. If Big Techs earnings are expected to grow by 9 percent per year, what is the projected price for next year assuming that the P/E ratio remains constant?

c If you had a required rate of return of 15 percent, expected the dividend payout ratio to remain constant, and dividends to grow at a rate of 9 percent, would you buy this stock? Explain your answer.