Consider the following scenario: The last dividend the company paid was D0=$1. The rate of growth in both earnings and dividends during the 3-year nonconstant growth period is gs=0%, the normat growth rate after the nonconstant period, l.e., starting at the end of year three and in the future is gn=4%, and the required (minimum acceptable) rate of return on the stock is r,=8%. What is the formula for the stock's intrinsic value in this case? P0=(1+r2)1D1+(1+r+)2D1+(1+r2)2D2+(1+2)4D2+(1+r2)4P1P0=(t+Fa)1D1+(1+r2)2D2+(1+F2)2D2+(1+r2)2P2P0=(1+3)2D1+(1+r2)2D2+(1+r3)2D3+(1+F2)2B3P0=(1+F2)1D1+(1+r2)2D1+(1+F2)2D1+(1+F2)2D4+(1+F2)4P^1 Now it's time for you to practice what you've learned. Suppose that the firm recently paid a dividend $5.35. It expects to have nonconstant growth of 9% for 3 years and then a constant rate of 5% thereafter. The firm's required return is 8%. The firm's horizon, or continuing, value is and its intrinsic value today is