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The market consensus is that Analog Electronic Corporation hasan ROE = 11% and a beta of 2

The market consensus is that Analog Electronic Corporation hasan ROE = 11% and a beta of 2.00. It plans to maintain indefinitelyits traditional plowback ratio of 3/5. This year's earnings were$2.4 per share. The annual dividend was just paid. The consensusestimate of the coming year's market return is 16%, and T-billscurrently offer a 5% return.

a.	Find the price at which Analog stock should sell. (Donot round intermediate calculations. Round your answer to 2 decimalplaces.)

Price

b.	Suppose your research convinces you Analog will announcemomentarily that it will immediately change its plowback ratio to2/5. Find the intrinsic value of the stock. (Do not roundintermediate calculations. Round your answer to 2 decimalplaces.)

Intrinsic value ofthe stock

Nov 30 2019 View more View Less

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The market consensus is that Analog Electronic Corporation hasan ROE = 11% and a beta of 2

Answer (UnSolved)

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