An organization recently paid a dividend, D0, of $3.75. It expects to have nonconstant growth of 16% for 2 years followed by a constant rate of 4% thereafter. The firm's required return is 10%.

A) How far away is the horizon date?

i. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of year two.

ii. The terminal, or horizon, date is infinity since common stocks do not have a maturity date.

iii. The terminal, or horizon, date is year 0 since the value of a common stock is the present value of all future expected dividends at time zero.

iv. The terminal, or horizon, date is the date when the growth rate becomes nonconsistent. This occurs at time zero.

v. The terminal, or horizon, date is the date whrn the growth rate becomes constant. This occurs at the beginning of year 2.

B) What is the firm's horizon, or continuing, value? Do not round intermediate calculations. Round your final answer to the nearest cent.

C) What is the firm's intrinsic value today, (P hat 0)? Do not round intermediate calculations. Round your final answer to the nearest cent.

1. Problem 9.04 (Nonconstant Growth Valuation) ebook Helt Enterprises recently paid a dividend, s, $3.75. It expects to have no constant growth of tos for 2 years followed by a constant rate ores thereafter. The fem's required retum is 10% 4. How far away is the horizon date The terminal, or horizon,cates the date when the growth rate bicomes constant. This count the end of Year 2 11. The terminal, or horondate Infinity since common stocks do not have a maturity dote III. The terminal, or horizon, dat is Year since the value of a common stock as the present value of all future gected dividends at time zero, IV. The terminal, or herion, Gate in the date when the growth rate become nontonstant. This occurs at time. V. The terminal, or horizon, Gates the date when the growth rate becomes constant. This count the beginning of Year 2 -S 5. What is the firm's horizon, or continuing value? Do not found intermediate calculation Round your antwer to the newest cork. c. What is the firm's intrinske value today, Por Do not round intermediate calculations. Round your answer to the nearest cent