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Graham Formula

Graham Formula

V      = Intrinsic Value
EPS = Trailing 12-month Earnings per Share
8.5   = Graham’s assumption of the P/E Ratio for a mature business
2g    = 2 x the company’s projected earnings growth rate
4.4   = Graham’s estimate of a risk-free rate
Y      = Required Return. Risk Free Rate + Inflation Rate + Investor Premium.

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