The market consensus is that Analog Electronic Corporation has an ROE=9%, a beta of 1.25, and...

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The market consensus is that Analog Electronic Corporation has an ROE=9%, a beta of 1.25, and plans to maintain indefinitely its traditional plowback ratio of 2/3. This year's earnings were $3 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 14%, and current T-bills currently offer a 6% return. a. Find the price at which Analog stock should sell. (4 marks) b. Calculate the leading and trailing P/E ratios. (2 marks) c. Calculate the present value of growth opportunities. (1 mark) 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. (2 marks) e. The market is still unaware of this decision. Explain why VO no longer equals PO and why V0 is greater or less than PO. (1 mark) The market consensus is that Analog Electronic Corporation has an ROE=9%, a beta of 1.25, and plans to maintain indefinitely its traditional plowback ratio of 2/3. This year's earnings were $3 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 14%, and current T-bills currently offer a 6% return. a. Find the price at which Analog stock should sell. (4 marks) b. Calculate the leading and trailing P/E ratios. (2 marks) c. Calculate the present value of growth opportunities. (1 mark) 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. (2 marks) e. The market is still unaware of this decision. Explain why VO no longer equals PO and why V0 is greater or less than PO. (1 mark)