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The market consensus is that Dudley Electronic Corporation (DCE) has an ROE = 9%, has a beta of 1

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The market consensus is that Dudley Electronic Corporation (DCE) has an ROE = 9%, has a beta of 1.25, and plans to maintain indefinitely its traditional plowback ratio of 2/3. This year’s earnings were $3 per share. The annual dividend has just been paid. The consensus estimate of the coming year’s market return is 14%, and T-bills currently offer a 6% return.

1. a) Estimate the value of DCE stock.

2. b) Estimate DCE’s P/E ratio.

3. c) Estimate DCE’s present value of growth opportunities.