Problem 18-10 The market consensus is that Analog Electronic Corporation has an ROE = 15%, a beta of 1.60, and plans to i traditional plowback ratio of 3/5. This year's earnings were $2.30 per share. The annual dividend was just p. estimate of the coming year's market return is 14%, 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 a
Problem 18-10 The market consensus is that Analog Electronic Corporation has an ROE = 15%, a beta of 1.60, and plans to i traditional plowback ratio of 3/5. This year's earnings were $2.30 per share. The annual dividend was just p. estimate of the coming year's market return is 14%, 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 a
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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 2/5. Find the intrinsic value of the stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Transcribed Image Text:Problem 18-10
The market consensus is that Analog Electronic Corporation has an ROE = 15%, a beta of 1.60, and plans to maintain indefinitely its
traditional plowback ratio of 3/5. This year's earnings were $2.30 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 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 answer to 2 decimal places.)
PIE Ratio
Leading
Trailing
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