The Parker Company sells at $45 per share, and the CEO of this firm estimates the latest 12-month EPS as $4 per share with a payout ratio of 30 percent.

a. What is Parkers current Price/Earning 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. The CEO estimates that the payout ratio will remain the same. Assume the expected growth rate of dividends is 10 percent. The investor computes the required rate of return by analyzing a risk-free rate of 7.5%, market return of 10%, and the beta of 2. 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 Parkers P/E ratio?

Note: It would be very appreciated if you solve it on a piece of paper!