Consider the following scenario: The last dividend the company paid was Db=$1. The rate of growth in both earnings and dividends during the 3 -year nonconstant growth period is gs=8% the normal growth rate after the nonconstant period, i.e. starting at the end of year three and in the future is gr=4% and the required (minimum acceptable) rate of return on the stock is rs=7%. What is the formula for the stock's intrinsic value in this case? Step 2: Leam: Nonconstant Growth Yaluation Suppose that the firm recently paid a dividend L0=$1.15. It expects to have nonconstant growth of gs=8% for 2 years and then a constant rate of ar=4% there after. The firm's required return is rs=7%. According to the problem walk-through video, what is the formula for the terminal, or continuing value, at the end of year 2 ? P2=(1+ms)2D2P2=rsgD2P2=(1+ms)zD3P2=rsgDs According to the problem walk-through video, what is the formula for the firm's intrinsic value today? P0=(1+ms)1D2+(1+ms)2D2+P2P0=(1+ms)1D1+(1+ms)2D2+(1+ms)2D2P0=(1+ms)2D2P0=(1+ms)1D1+(1+ms)2D2+(1+ms)sDs+(1+ms)2D2 The firm's horizon value is The firm's intrinsic value is Step 3: Practice: Nonconstant Growth Yaluation Now it's time for you to practice what you've learned. Suppose that the firm recently paid a dividend $1.15. It expects to have nonconstant growth of 8% for 3 years and then a constant rate of 4% thereafter. The firm's required return is 7%. The firm's horizon, or continuing, value is and its intrinsic value today is