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Holt Enterprises recently paid a dividend, D 0 , of $1.00. It expects to have nonconstant growth of 22% for 2 years followed by a
Holt Enterprises recently paid a dividend, D0, of $1.00. It expects to have nonconstant growth of 22% for 2 years followed by a constant rate of 3% thereafter. The firm's required return is 11%.
- How far away is the horizon date?
- The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of Year 2.
- The terminal, or horizon, date is infinity since common stocks do not have a maturity date.
- 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.
- The terminal, or horizon, date is the date when the growth rate becomes nonconstant. This occurs at time zero.
- The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the beginning of Year 2.
- What is the firm's horizon, or continuing, value? Do not round intermediate calculations. Round your answer to the nearest cent.
$
- What is the firm's intrinsic value today, ? Do not round intermediate calculations. Round your answer to the nearest cent.
$
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