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Cavanaugh Construction specializes in designing and building custom homes. Business has been excellent, and Cavanaugh projects a 9.5% growth rate for the foreseeable future. The
Cavanaugh Construction specializes in designing and building custom homes. Business has been excellent, and Cavanaugh projects a 9.5% growth rate for the foreseeable future. The company just paid a $3.70 dividend. Comparable stocks are returning 10.8%. Round the answers to two decimal places.
- What is the intrinsic value of Cavanaugh stock? $ fill in the blank 1
- Does this seem reasonable?
- If Cavanaugh's growth rate is only 8.5% and comparable stocks are really returning 12%, what is Cavanaugh's intrinsic value? $ fill in the blank 3
- Do these relatively small changes in assumptions justify the change in the intrinsic value?
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