Buffalo Company's earnings are expected to grow rapidly for the next 12 years and then settle down to a more normal, long-term growth rate

Business Sep 12, 2020

Buffalo Company's earnings are expected to grow rapidly for the next 12 years and then settle down to a more normal, long-term growth rate. Assuming the equity cost of capital for Buffalo is 15%, the growth rate for the rapid growth period is 20%, and the growth rate for the normal growth period is 8%, use the H-model to value Buffalo's stock if Buffalo paid a dividend of $3.10 last year.

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