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The market consensus is that Analog Electronic Corporation has an ROE = 15%, a beta of 1.90, and plans to maintain indefinitely its traditional plowback
The market consensus is that Analog Electronic Corporation has an ROE = 15%, a beta of 1.90, and plans to maintain indefinitely its traditional plowback ratio of 1/5. This year's earmings were $3.20 per share. The annual dividend was just pald. The consensus estimate of the coming year's market return is 16%, and T-bills currently offer a 5% return. a. Find the price at which Analog stock should sell. (Do not round Intermedlate calculations. Round your answer to 2 declmal places.) Price b. Calculate the P/E ratio. (Do not round Intermedlate calculations. Round your answer to 2 decimal places.) P/E Ratic Leading Trailing c. Calculate the present value of growth opportunities. (Negatlve amount should be Indicated by a minus sign. Do not round Intermediete calculetions. Round your answer to 2 declmal places.) PVGO d. Suppose your research convinces you Analog will announce momentarlly that It will Immediately change its plowback ratio to 4/5. Find the Intrinsic value of the stock. (Do not round Intermedlate calculetions. Round your answer to 2 declmel places.) sic value
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