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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
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 $3 per share. The annual dividend was just pald. The consensus estimate of the coming year's market return is 14%, and T-bills currently offer a 6% return. a. Find the price at which Analog stock should sell. (Do not round Intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.) Price $ b. Calculate the P/E ratio. (Do not round Intermediate calculations. Round your answers to 2 decimal places.) 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. Omlt the "$" sign in your response.) PVGO $ 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. Intrinsic value e. Not available in Connect
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