Nana Milk, a dairy product company, reported EPS of $2.40 in 2019, and paid dividends per share of $1.06. The earnings and dividends had grown 7.5% a year over the prior five years, and were expected to grow 6% a year in the long term (starting in 2020). The stocks required return is 12.775%, and the actual P/E ratio is currently 10.

a) Estimate the fair P/E ratio for Nana Milk. b) What long-term growth rate is implied in the firms current P/E ratio?