Question
In: Finance
The market consensus is that Analog Electronic Corporation has an ROE of 9% and a beta...
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.
a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. Calculate the P/E ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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.)
d. Suppose your research convinces you Analog will announce momentarily that it will immediately reduce its plowback ratio to 2/5. Find the intrinsic value of the stock.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
The market consensus is that Analog Electronic Corporation has an ROE of 9% and a beta...
The market consensus is that Analog Electronic Corporation has
an ROE of 9% and a beta of 2.05. It plans to maintain indefinitely
its traditional plowback ratio of 2/3. This year's earnings were
$3.8 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...
The market consensus is that Analog Electronic Corporation has an ROE = 6% and a beta...
The market consensus is that Analog Electronic Corporation has
an ROE = 6% and a beta of 1.30. It plans to maintain indefinitely
its traditional plowback ratio of 3/5. This year's earnings were
$3.0 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...
The market consensus is that Analog Electronic Corporation has an ROE = 23%, a beta of...
The market consensus is that Analog Electronic Corporation has
an ROE = 23%, a beta of 2.20, and plans to maintain indefinitely
its traditional plowback ratio of 2/5. This year’s earnings were
$3.80 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...
The market consensus is that Analog Electronic Corporation has an ROE = 24%, a beta of...
The market consensus is that Analog Electronic Corporation has
an ROE = 24%, a beta of 2.25, and plans to maintain indefinitely
its traditional plowback ratio of 2/5. This year’s earnings were
$3.90 per share. The annual dividend was just paid. The consensus
estimate of the coming year’s market return is 16%, 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...
The market consensus is that Analog Electronic Corporation has an ROE = 11%, a beta of...
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...
The market consensus is that Analog Electronic Corporation has an ROE = 13%, a beta of...
The market consensus is that Analog Electronic Corporation has
an ROE = 13%, a beta of 2.00, and plans to maintain indefinitely
its traditional plowback ratio of 3/5. This year’s earnings were
$3.40 per share. The annual dividend was just paid. The consensus
estimate of the coming year’s market return is 11%, 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...
The market consensus is that Analog Electronics Corporation has an ROE = 13%, a beta of...
The market consensus is that Analog Electronics Corporation has
an ROE = 13%, a beta of 1.80, and plans to maintain indefinitely
its traditional blowback ratio of 3/4. This year’s earnings were
$3.10 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 5% return. a. Find the price at which Analog
stock should sell. (Do not round intermediate calculations. Round
your answer to 2 decimal...
EXERCISE #1: The market consensus is that Analog Electronic Corporation has an ROE = 10% and...
EXERCISE #1: The market consensus is that Analog Electronic
Corporation has an ROE = 10% and a beta of 1.2. It 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. Use the CAPM to get the cost of equity: rE =
B. Using the plowback info, the...
Company A has an ROE of 9%, a beta of 1.25, and with a plowback ratio...
Company A has an ROE of 9%, a beta of 1.25, and with a plowback
ratio of 2/3. This year's earnings of A were $3 per share, and the
annual dividend was just paid. The consensus estimate of the
expected market return is 14% in the upcoming year, and the
risk-free return is 6%. Suppose your research suggests that A will
momentarily announce a decision that it will immediately reduce its
plowback ratio to 1/3. The market is still unaware...
Assume that Firm XYZ’s ROE= 15%, its beta = 2, the market return = 15%, the...
Assume that Firm XYZ’s ROE= 15%, its beta = 2, the market return
= 15%, the risk-free rate = 5%. The firm’s current Dividend Payout
Ratio = 60%. If the firm increases its Dividend Payout Ratio to
80%, its instinct value will
a)Increase
b)Decrease
c)Stay the same
d)Not enough information to decide
e)First decrease in short-term and then increase in the
long-term
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