Problem $18-10($Algo$)$

The market consensus is that Analog Electronic Corporation has an ROE $=15\%$ and a beta of $1\mathrm{.}90$ and plans to maintain indefinitely its traditional plowback ratio of $\frac{1}{5}.$ This year's earnings were $$3\mathrm{.}20$ per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is $16\%,$ and T$-$bills currently offer a $5\%$ return.

Required:

a$.$ Find the price at which Analog stock should sell.

b$.$ Calculate the P$/$E ratio.

c$.$ Calculate the present value of growth opportunities.

d$.$ Suppose your research convinces you Analog will announce momentarily that it will immediately reduce its plowback ratio to $\frac{4}{5}.$ Find the intrinsic value of the stock.

Complete this question by entering your answers in the tabs below.

Required $A$

Required B

Required C

Required D

Calculate the $\frac{P}{E}$ ratio.

Note: Do not round intermediate calculations. Round your answers to $2$ decimal places.

$\backslash$table$[[,$P$/$E Ratio$],[$Leading$,4\mathrm{.}49],[$Trailing$,4\mathrm{.}59]]$