Calculate the present value of growth opportunities

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Reference no: EM131489054

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.

b. Calculate the P/E ratio

c. Calculate the present value of growth opportunities.

Reference no: EM131489054

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