# Question: the market consensus is that analog electronic corporation has an...

###### Question details

The market consensus is that Analog Electronic Corporation has an ROE = 23%, a beta of 2.20, and plans to maintain indefinitely its traditional plowback ratio of 2/5. This year’s earnings were $3.80 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.)**

**b.** Calculate the P/E ratio. **(Do not
round intermediate calculations. Round your answer to 2 decimal
places.)**

**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.)**

**d.** Suppose your research convinces you Analog
will announce momentarily that it will immediately change its
plowback ratio to 3/5. Find the intrinsic value of the stock.
**(Do not round intermediate calculations. Round your answer
to 2 decimal places.)**