Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Please help me do these questions. Id deeply appreciate it 10. The Parker Dental Supply Company sells at $36 per share, and Ray Parker, the

Please help me do these questions. Id deeply appreciate it
image text in transcribed
10. The Parker Dental Supply Company sells at $36 per share, and Ray Parker, the CEO of this well-known Research Triangle firm, estimates the latest 12-month earnings are $4.00 per share with a dividend payout of 50 percent. Dr. Parker's earnings estimates are very accurate. 4 points a. What is Parker's current P/E ratio? .b. If an investor expects earnings to grow by 10 percent a year, what is the projected price for next year if the P/E ratio remains unchanged? .c. Dr. Parker analyzes the data and estimates that the payout ratio will remain the same. Assume the expected growth rate of dividends is 10 percent, and an investor has a required rate of return of 16 percent, would this stock be a good buy? Why or why not? . d. If interest rates are expected to decline, what is the likely effect on Parker's P/E ratio

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions