P/E Ratio. Wilson Corporation anticipates a 10 percent growth in net income and dividends. Next year, the company expects earnings per share of $5 and dividends per share of $3. Wilson will be having...

P/E Ratio. Wilson Corporation anticipates a 10 percent growth in net income and dividends. Next year, the company expects earnings per share of $5 and dividends per share of $3. Wilson will be having its first public issuance of common stock. The stock will be issued at $40 per share.

(a) What is the P/E ratio? (b) What is the required rate of return on the stock?