Question
Halliford, Inc. expects EPS of $4.50 for the coming year. Halliford plans to retain 80% of...
Halliford, Inc. expects EPS of $4.50 for the coming year. Halliford plans to retain 80% of earnings for the next three years. Beginning in year four and thereafter, Halliford will retain 25% of earnings. Return on new investment will be 25% in each of the next two years. Beginning in year 3 and thereafter, return on new investment will be 12%. If Halliford's cost of equity is 10%, what is the stock’s intrinsic value?
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