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 CCalculate the P/E ratio.Note: Do not round intermediate calculations. Round your answers to 2 decimal places.LeadingTrailingP/E RatioRequired D30.8733.41

a. Stock Price: The calculated stock price, using the Gordon Growth Model and the given financial…

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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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 Required D Find the price at which Analog stock should sell. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price
The market consensus is that Analog Electronic Corporation has an ROE = 9%, a beta of 1.25, and plans to maintain indefinitely its traditional plowback 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 Analog will announce momentarily that it will immediately reduce its plowback ratio to 1/3. Find the intrinsic value of the stock.e. The market is still unaware of this decision. Explain why V0 no longer equals P0 and why V0 is greater or less than P0.
The market consensus is that Analog Electronic Corporation has an ROE of 9% and a beta of 1.95. It plans to maintain indefinitely its traditional plowback ratio of 3/5. This year's earnings were $2.6 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. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price $ 6.77 . b. Calculate the P/E ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Leading Trailing P/E ratio 2.47 2.60 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 2/5. Find the…
The market consensus is that Analog Electronic Corporation has an ROE = 12%, has a beta of 2.10, and plans to maintain indefinitely its traditional plowback ratio of 1/3. This year's earnings were $3.60 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 13%, and T-bills currently offer a 5% return. a. Find the price at which Analog stock should sell Calculate the P/E ratio c. Calculate the present value of growth opportunities.
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…
The market consensus is that Analog Electronic Corporation has an ROE = 9% and a beta of 1.25 and plans to maintain indefinitely its traditional plowback 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 Analog will announce momentarily that it will immediately reduce its plowback ratio to 1/3. Find the intrinsic value of the stock. e. The market is still unaware of this decision. Explain why Vo no longer equals Po and why Vo is greater or less than Po.
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: Find the price at which Analog stock should sell. Calculate the P/E ratio. Calculate the present value of growth opportunities. 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.
The market consensus is that Analog Electronic Corporation has an ROE = 11%, 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. a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Calculate the P/E ratio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. 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.) c. Suppose your research convinces you Analog will announce momentarily that it will immediately change its plowback ratio to 1/4. Find the intrinsic value of the stock. (Do not round…
The market consensus is that Analog Electronic Corporation has an ROE = 12%, a beta of 1.70, and plans to maintain indefinitely its traditional plowback ratio of 1/3. This year's earnings were $2.10 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 12%, and T-bills currently offer a 5% return. a. Find the price at which Analog's stock should sell (round to 2 decimal places). Price $? b. Calculate the P/E ratio (round to 2 decimal places). P/E Ratio Leading Trailing c. Calculate the present value of growth opportunities (round to 2 decimal places). PVGO $? d. Suppose your research convinces you Analog will announce momentarily that it will immediately reduce its plowback ratio to 2/3. Find the intrinsic value of the stock. Intrinsic Value $?
Nachman Industries just paid a dividend of Do = $1.50. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 4% in Year 3 and thereafter. The required return on this low-risk stock is 7.00%. What is the best estimate of the stock's current market value? Do not round intermediate calculations. a. $52.41 b. $70.14 c. $64.40 d. $68.64 e. $66.15
Miltmar Corporation will pay a year-end dividend of $4, and dividends thereafter are expected to grow at the constant rate of 6% per year. The risk-free rate is 5%, and the expected return on the market portfolio is 10%. The stock has a beta of 0.66.Required: a. Calculate the market capitalization rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the intrinsic value of the stock?
Crisp Cookware’s common stock is expected to pay a dividend of $3 a share at the end of this year (D1 = $3.00); its beta is 0.8. The risk-free rate is 5.2%, and the market risk premium is 6%. The dividend is expected to grow at some constant rate g, and the stock currently sells for $40 a share. Assuming the market is in equilibrium, what does the market believe will be the stock’s price at the end of 3 years (i.e., what is P3)?

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