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Business, 05.12.2019 18:31 sergun252005

The market consensus is that analog electronic corporation has an roe = 9% and a beta of 1.25. it plans to maintain indefinitely its traditional plow-back ratio of 2/3. this year's earnings were $3 per share. the annual dividend was just paid. 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?

b) calculate the p/e ratio.

c) calculate the present value of growth opportunities.

d) suppose your research convinces you that analog will announce momentarily that it will immediately reduce its plow-back ratio to 1/3, then find the intrinsic value of the stock.

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