Using the H-Model to value Buffalo Stock
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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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Solution Summary
The solution attaches an Excel sheet showing the calculations to value this company's stock in the given circumstances.
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