The market consensus is that Analog Electronic Corporation has an ROE $=23\%$ and a beta of $2\mathrm{.}20$ and plans to maintain indefinitely its traditional plowback ratio of $2/5.$ This year$$s earnings were $$3\mathrm{.}80$ per share. The annual dividend was just paid. The consensus estimate of the coming year$$s market return is $15\%,$ and T$-$bills currently offer a $5\%$ return.

Required:

Find the price at which Analog stock should sell.

Calculate the P$/$E ratio.

Calculate the present value of growth opportunities.

Suppose your research convinces you Analog will announce momentarily that it will immediately reduce its plowback ratio to $3/5.$ Find the intrinsic value of the stock.