The market consensus is that Dudley Electronic Corporation (DCE) has an ROE = 9%, has a beta of 1.25, and plans to maintain indefinitely its traditional plowback ratio of 2/3. This years earnings were $3 per share. The annual dividend has just been paid. The consensus estimate of the coming years market return is 14%, and T-bills currently offer a 6% return.

1. a) Estimate the value of DCE stock.

2. b) Estimate DCEs P/E ratio.

3. c) Estimate DCEs present value of growth opportunities.