Firm Valuation: Assume an all equity firm has been growing at a 15 percent annual rate and is expected to continue to do so for 3 more years. At that time, growth is expected to slow to a constant 4 percent rate. The firm maintains a 30 percent payout ratio, and this year's retained earnings net of dividends were $1.4 million. The required return for this firm is 13 percent. If the market is in equilibrium, what is the market value of the firm's common equity (1 million shares outstanding)?

These are the steps below:

r_s = 13% or .13

Net Income = $1,400,000/(1 30% payout ratio)

Net Income = $1,400,000/.7 = $2,000,000

Dividends = $2,000,000 * 30% or .3 = $600,000

D₀ = $600,000/1,000,000 shares outstanding = $.6

Growth at 15% for year 1 to year 3, dividend will be:

D₁ = D₀ (1 + g)

D₁ = $.6 (1 + 15%) = $.69

D₂ = $.69 (1 + 15%) = $.794

D₃ = $.794 (1 + 15%) = $.913

D₄ = $.913 (1 + 4%) = $.950

P₃ = $.950/.13 - .04 = $10.56

On the financial calculator, input CF₀ = 0, CF₁ = .69, CF₂ = .794, CF₃ = 11.469, I/Y = 13

NPV = $9.18

P₀ * Shares Outstanding

$9.18 * 1,000,000 = $9,180,000

I know the answer is correct. The only part I can't figure out is that on the financial calculator, where did CF₃ = 11.469 come from. I don't know how to get this number. Please help me. Thanks