Calculate present value of growth opportunities

Assignment Help Financial Management
Reference no: EM131539820

The market consensus is that Analog Electronic Corporation has an ROE = 11%, has a beta of 1.50, and plans to maintain indefinitely its traditional plowback ratio of 1/5. This year's earnings were $2.50 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. Omit the "$" sign in your response.)

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. Omit the "$" sign in your response.)

PVGO $

Reference no: EM131539820

Questions Cloud

Health insurance portability and accountability act : What are the components of the Health Insurance Portability and Accountability Act (HIPAA) of 1996?
Utilize the formal vocabulary in describing works of art : Analyze how the subject and context of work can help with interpretation.Utilize the formal vocabulary in describing works of art.
Considering proposal to enter new line of business : ?Domenghini Inc. is considering a proposal to enter a new line of business. What is the project’s net present value (NPV)?
Discuss how others may view them or treat them and why : What are their thoughts and behaviors? Discuss why they may have these thoughts and behaviors. Discuss how others may view them or treat them and why
Calculate present value of growth opportunities : Find the price at which Analog stock should sell. Calculate the present value of growth opportunities.
Process of globalization : How is the "process of globalization" different today than in 2000? Name three historical milestones since 9/11 that have changed the course of globalization.
Compute the direct materials cost variance : Carlsbad Company has set the following standard costs per unit for the product it manufactures.
Explain organizational culture : Explain organizational culture - what is it? How does top management impact the culture of the organization?
Time-weighted geometric average return on this portfolio : Calculate the time-weighted geometric average return on this “portfolio.”

Reviews

Write a Review

Financial Management Questions & Answers

  Prepare capital budgeting model and analysis

Describe a capital budgeting project (i.e., an investment in fixed assets) that might be undertaken by the company that you have selected.

  The SVP of Operations just phoned with good news

You've been analyzing a $10 million capital investment with a 5-year useful life, but it has a negative NPV of $500,000. However, the SVP of Operations just phoned with good news: The initial investment in the capital asset will be $1 million less th..

  Compute the realised rate of return for investors

Six years ago the Singleton Company sold a 20-year bond issue with a 14 percent annual coupon rate and a 9 percent call premium. Today, Singleton called the bonds. The bonds were originally sold at their face value of $1000. Compute the realised rate..

  Preferred stock-common stock and debt

Information on Marshall Power Co., is shown below. Assume the company’s tax rate is 35 percent. Debt: 8,500 7.2 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 118 percent of par; the bonds make semiannual paymen..

  Present and future values for different periods

Find the following values using the equations and then a financial calculator. Compounding/discounting occurs annually. Round your answers to the nearest cent. An initial $700 compounded for 1 year at 9%. The present value of $700 due in 2 years at a..

  Bought a bond with an annual coupon rate

Suppose you bought a bond with an annual coupon rate of 7.6 percent one year ago for $840. The bond sells for $885 today. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? What was your total nomin..

  Argument for centralization of sovereign powers

Which of the following is NOT an argument for centralization of sovereign powers? Which of the following is not an argument against mandates?

  What would the value be if the payments occurred forever

An investment offers $5,400 per year for 10 years, with the first payment occurring one year from now. What would the value be if the payments occurred forever?

  What is your estimate of the stocks current price

What is your estimate of the stock's current price?

  Best defines the term dividend record date

Which of the following best defines the term “dividend record date”?

  The owner of a manufacturing plant borrows

The owner of a manufacturing plant borrows $200,000 to buy new robotic equipment for the plant. The loan is to be repaid over 16 years in equal quarterly payments at 4% annual interest with no payments for the first year (interest does accrue the fir..

  What is aftertax cash flow from the sale of this asset

what is the aftertax cash flow from the sale of this asset?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd