The market consensus is that CameCon Industries has an ROE = 10%, a beta of 1.3, and plans to maintain indefinitely its traditional plowback ratio of 75%. This years earnings were $4 per share. The annual dividend was just paid. The consensus estimate of the coming years market return is 14%, and T-bills currently offer a 5% return. a. What is the intrinsic value of a share of CameCon stock and calculate the P/E ratio. b. Calculate the present value of growth opportunities c. Suppose your research convinces you Analog will announce momentarily that it will immediately reduce its plowback ratio to 50%. Find the new intrinsic value of the stock and the new P/E ratio.

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