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Please help answer all 4 questions in attachment. (Q's 1, 2, 8, 10) 1. Deployment Specialists pays a current (annual) dividend of $1 and is
Please help answer all 4 questions in attachment. (Q's 1, 2, 8, 10)
1. Deployment Specialists pays a current (annual) dividend of $1 and is expected to grow at 24% for two years and then at 6% thereafter. If the required return for Deployment Specialists is 10.0%, what is the intrinsic value of Deployment Specialists stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Intrinsic value $ Answer is NOT 43.14 2. A firm pays a current dividend of $2, which is expected to grow at a rate of 9% indefinitely. If the current value of the firm's shares is $109, what is the required return applicable to the investment based on the constant-growth dividend discount model (DDM)? (Do not round intermediate calculations.) DDM % 8. Even Better Products has come out with a new and improved product. As a result, the firm projects an ROE of 20%, and it will maintain a plowback ratio of 0.40. Its projected earnings are $3 per share. Investors expect a 16% rate of return on the stock. a. At what price and P/E ratio would you expect the firm to sell? (Do not round intermediate calculations. Round your answers to 2 decimal places.) $ Price P/E ratio b. What is the present value of growth opportunities? (Do not round intermediate calculations. Round your answer to 2 decimal places.) PVGO $ c. What would be the P/E ratio and the present value of growth opportunities if the firm planned to reinvest only 30% of its earnings? (Do not round intermediate calculations. Round your answers to 2 decimal places.) P/E ratio PVGO $ 10. The market consensus is that Analog Electronic Corporation has an ROE = 9% and a beta of 1.65. It plans to maintain indefinitely its traditional plowback ratio of 2/3. This year's earnings were $2.8 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 14%, and T-bills currently offer a 6% return. a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price $ b. Calculate the P/E ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.) P/E ratio Leading Trailing 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.) PVGO $ d. Suppose your research convinces you Analog will announce momentarily that it will immediately reduce its plowback ratio to 1/3. Find the intrinsic value of the stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Intrinsic value of the stock $Step by Step Solution
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