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When a stock is going through a period of no constant growth for T periods, followed by constant growth forever, the residual income model can
When a stock is going through a period of no constant growth for T periods, followed by constant growth forever, the residual income model can be modified as follows: EPS_t + B_t-i - B_t P_T = B_T + EPS_T(1 +g) - B_T times k/k - g Al's Infrared Sandwich Company had a book value of $16.95 at the beginning of the year, and the earnings per share for the past year were $10.65. Molly Miller, a research analyst at Miller, Moore & Associates, estimates that the book value and earnings per share will grow at 22.50 and 21.00 percent per year for the next four years, respectively. After four years, the growth rate is expected to be 6 percent. Molly believes the required return for the company is 12.20 percent. What is the value per share for Al's Infrared Sandwich Company
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