Question
The market consensus is that Analog Electronic Corporation has an ROE = 24%, has a beta of 2.25, and plans to maintain indefinitely its traditional
| The market consensus is that Analog Electronic Corporation has an ROE = 24%, has a beta of 2.25, and plans to maintain indefinitely its traditional plowback ratio of 2/5. This year's earnings were $3.90 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 16%, and T-bills currently offer a 6% return. |
| a. | Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.) |
| Price |
| $ |
| b. | Calculate the P/E ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| Leading | |
| Trailing | |
| c. | Calculate the present value of growth opportunities. |
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Ethics In Finance
Authors: John R. Boatright
3rd Edition
1118615824, 978-1118615829
