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Estimate the p-e ratio for national city corporation

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Question: National City Corporation, a bank holding company, reported earnings per share of $2.40 in 1993, and paid dividends per share of $1.06. The earnings 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 1994). The stock had a beta of 1.05 and traded for ten times earnings. The treasury bond rate was 7%.

a. Estimate the P/E Ratio for National City Corporation.

b. What long term growth rate is implied in the firm's current PE ratio?

Reference no: EM131690411

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