The market consensus is that Analog Electronic Corporation has an ROE = 11% and a beta of 1.45 and plans to maintain indefinitely itstraditional plowback ratio of 3/4. This year's earnings were $2.60 per share. The annual dividend was just paid. The consensusestimate of the coming year's market return is 14%, and T-bills currently offer a 6% return.Required: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 Analog will announce momentarily that it will immediately reduce its plowback ratio to 1/4.Find the intrinsic value of the stock.Complete this question by entering your answers in the tabs below.Required A Required B Required CRequired DFind the price at which Analog stock should sell.Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Price

Price per share: Current dividend * (1+growth rate) / (required return - dividend growth rate)…

Answered: The market consensus is that Analog…

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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Westlake Company's stock has an estimated beta of 1.5 and the company just paid a dividend of $2 per share. Westlake is expected to grow its dividends at 5% p.a. indefinitely. The risk-free interest rate is 4% per annum, and the estimated market risk premium is 6%. 1. Use the CAPM to calculate Westlake' required rate of return. 2. Estimate Westlake's intrinsic value per share.
The risk-free rate of return is 5%, the required rate of return on the market is 10%, and High-Flyer stock has a beta coefficient of 1.8. If the dividend per share expected during the coming year, D1, is $3.60 and g = 5%, at what price should a share sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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The market consensus is that Analog Electronic Corporation has an ROE of 10% and a beta of 2.20. It plans to maintain indefinitely its traditional plowback ratio of 3/5. This year's earnings were $4.4 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. Required: a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Price $ 8.88 b. Calculate the P/E ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Leading Trailing Answer is not complete. P/E ratio 2.02 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.) Answer is complete but not entirely correct. PVGO $ (7.42) d. Suppose your research convinces you…
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Muller's Investigative Services has stock is trading at $45 per share. The stock is expected to have a year-end dividend of $3 per share (D₁ = $3), and it is expected to grow at some constant rate, g₁, throughout time. The stock's required rate of return is 12% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of g₁? Do not round intermediate calculations. Round the answer to two decimal places
The market consensus is that Analog Electronic Corporation has an ROE = 11% and a beta of 1.45 and plans to maintain indefinitely its traditional plowback ratio of 3/4. This year's earnings were $2.60 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. Required: 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 Analog will announce momentarily that it will immediately reduce its plowback ratio to 1/4. Find the intrinsic value of the stock. Complete this question by entering your answers in the tabs below. Required A Required B Required C Calculate the P/E ratio. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Leading Trailing P/E Ratio Required D 30.87 33.41
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