Below you see forecasted EPS for F&H industries. The company maintains a 35% dividend payout ratio. You estimate the cost of equity to be 12%. The current stock price of the company is $70. A. Compute the intrinsic value of the stock based on the dividend discount model, assuming that after year 5 the company will enter a sustained growth period with g=8%. B. Now compute the intrinsic value of the stock where the terminal value is estimated using market comparable. You assume that the comparable companies will have a trailing P/E ratio of 10 in year 5. C. Is the stock over- or undervalued? What would you recommend to a potential investor? D. What if in fact the appropriate discount rate r was not 12%? Pick a different discout rate and explain how it would change your estimated intrinsic value? What would you recommend then? Forecasted EPS for F&H Industries Year Earnings Per Share 1 2 $ 5.23 $ 6.28 $ 3 7.41 4 8.59 $ 5 9.79 $ A. Terminal Value approach Price B. P/E approach P/E Price C. Recommendation D. Change in discount rate analysis Different rate chosen