The risk-free rate of return is 8 percent, the expected rate of return on the market portfolio is 16 percent, and the stock of Analog Corporation has a beta coefficient of 1.5. Analog pays out 40 percent of its earnings in dividends, and the earnings per share in the coming year are expected to be $2. Dividends were just paid and expected to be paid annually. Analog will earn an ROE of 20 percent per year on all reinvested earnings forever. Estimate the firm's expected dividend growth. Calculate the equilibrium required rate of return according to the CAPM. Estimate the fair value of the stock. If the stock is selling at $11, what is the expected return? Is the market in equilibrium? If not, how would equilibrium be achieved? Calculate the present value of growth opportunity. Explain your answer. If Analog were to cut its dividend payout ratio to 25 percent, what would happen its stock price (calculate the new price)? Why