Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PLEASE ANSWER PART C The market consensus is that Analog Electronic Corporation has an ROE of 9% and a beta of 2.10. It plans to

PLEASE ANSWER PART C

image text in transcribed

The market consensus is that Analog Electronic Corporation has an ROE of 9% and a beta of 2.10. It plans to maintain indefinitely its traditional plowback ratio of 3/4. This year's earnings were $4.1 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 13%, and T-bills currently offer a 5% return. a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Price S 7.24 b. Calculate the P/E ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete and correct. Leading Trailing P/E ratio 1.65 1.76 c. Calculate the present value of growth opportunities. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete but not entirely correct. PVGO S (34.01)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Bakers Health Care Finance Basic Tools For Nonfinancial Managers

Authors: Thomas K. Ross

6th Edition

1284233162, 978-1284233162

More Books

Students also viewed these Finance questions