AgriCorp is in the rapid growth phase of its life cycle.The projected dividends for the next three years are $2.00, $2.50, and $3.00.

After the third year, the growth rate of the dividends is projected to fall off to a constant 6%.

Assume that the required rate of return is 15%.

 

a) Calculate the the terminal (horizon) value.

 

b) Calculate the value of the stock today.