National City, a bank holding company, reported earnings per share of $2.40 and paid dividends per share of $1. The earnings had grown 7.

National City, a bank holding company, reported earnings per share of $2.40 and paid dividends per share of $1.06. The earnings had grown 7.5% a year over the prior 5 years, and were expected to grow 6% a year in the long run. 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

B. What long term growth rate is implied in the firms current PE Ratio?