In the readings it covered implied growth estimates and intrinsic value, please explain in detail what each one is, and give an example of a company and analyze its implied growth basing this on an industry analysis and its intrinsic value Intrinsic Value = Eps x [8.5 + (2 x forecast annual earnings growth %)] Put into words, a companys intrinsic value is its latest annual earnings multiplied by a factor equal to 8.5 plus twice the projected earnings growth rate. Graham modified the formula to account for the notion that stock valuations vary inversely with prevailing interest rates. That is, stocks tend to trade at higher valuations when interest rates are low, and vice versa (see Chapter 2). Graham used AAA (highest quality) cor-porate bond rates as a proxy for prevailing interest rates. The AAA cor-porate bond rates were around 4.4 percent when he first devised the formula, so the revised version looks like: Intrinsic Value = Eps x (4.4/AAA bond rate) x [8.5 + (2 x forecast annual earnings growth %)] (where AAA is the current yield of AAA-rated corporate bonds) Implied growth rate = P/E (AAA Bond rate/8.8) 4.25 Implied growth, as Ive defined it, is the long-term average annual earnings growth that the company would have to achieve to justify its current P/E. 8.5: the constant represents the appropriate PE ratio for no-growth Company as proposed by graham 4.4: the average yield for a AAA bond in 1962 when the model was introduced

Use both methods