Find the price at which analog stock should sell

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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.

b. Calculate the P/E ratio.

c. Calculate the present value of growth opportunities.

Reference no: EM132000635

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