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Category > Business & Finance Posted 03 Jun 2017 My Price 12.00

Problem 13-20

Problem 13-20

The market consensus is that Analog Electronic Corporation has an ROE = 10% and a beta of 1.50. It plans to maintain indefinitely its traditional plowback ratio of 1/5. This year's earnings were $2.1 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 15%, and T-bills currently offer a 5% return.
a.

Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
  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.)
  PVGO $   
d.

Suppose your research convinces you Analog will announce momentarily that it will immediately reduce its plowback ratio to 4/5. Find the intrinsic value of the stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
  Intrinsic value of the stock $   

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Status NEW Posted 03 Jun 2017 11:06 AM My Price 12.00

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