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The market consensus is that Analog Electronic Corporation has an ROE = 12%, a beta of 2.10, and plans to maintain indefinitely it traditional plowback
The market consensus is that Analog Electronic Corporation has an ROE = 12%, a beta of 2.10, and plans to maintain indefinitely it traditional plowback ratio of 1/3. This year's earnings were $3.60 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.) Price b. Calculate the P/E ratio. (Do not round intermediate calculations. Round your answer 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 change its plowback ratio to 1/4. Find the intrinsic value of the stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Intrinsic value
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