1. You are a financial analyst and you have the following information for Dominion Tech Company. Dominion Tech Company has beta of 1.5 and a ROE of 15%. The plowback ratio is 40%. Last twelve month earnings were $3 per share. The annual dividend was just paid. The consensus estimate of the coming yearâs market return is 15%, and T-bills currently offer a 5% return.
1a. Find the intrinsic value of Dominion stock
1b. Compute the Leading P0/E1 and Trailing P0/E0 ratios.
1c. Calculate the PVGO?
1d. Suppose your research convinces you that Dominion will announce momentarily that it will immediately increase its plow-back ratio to 60%. Find the intrinsic value of the stock. The market is still unaware of this decision. Explain why the value changes.
1. You are a financial analyst and you have the following information for Dominion Tech Company. Dominion Tech Company has beta of 1.5 and a ROE of 15%. The plowback ratio is 40%. Last twelve month earnings were $3 per share. The annual dividend was just paid. The consensus estimate of the coming yearâs market return is 15%, and T-bills currently offer a 5% return.
1a. Find the intrinsic value of Dominion stock
1b. Compute the Leading P0/E1 and Trailing P0/E0 ratios.
1c. Calculate the PVGO?
1d. Suppose your research convinces you that Dominion will announce momentarily that it will immediately increase its plow-back ratio to 60%. Find the intrinsic value of the stock. The market is still unaware of this decision. Explain why the value changes.
Related questions
| The market consensus is that Analog Electronic Corporation has an ROE = 9%, has a beta of 1.65, and plans to maintain indefinitely its traditional plowback ratio of 2/3. This year's earnings were $2.20 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 11%, and T-bills currently offer a 6% return. |
| a. | Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" 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 | $ |
