1. 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?