Suppose that the firm recently paid a dividend D0=$2.20. It expects to have nonconstant growth of gs=11% for 2 years and then a constant rate of gn=3% thereafter. The firm's required return is rs=10%. 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+rs)3D3P2=rsgD3P2=rsgD2P2=(1+rs)2D2 According to the problem walk-through video, what is the formula for the firm's intrinsic value today? P0=(1+rs)2P2P0=(1+rs)1D1+(1+rs)2D2+P2P0=(1+rs)1D1+(1+rs)2D2+(1+rs)3D3+(1+rs)2P2P0=(1+rs)1D1+(1+rs)2D2+(1+rs)2P2 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=11%, the normal growth rate after the nonconstant period, i.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 rs=10%. What is the formula for the stock's intrinsic value in this case? P0=(1+rs)1D1+(1+rs)2D2+(1+rs)3D3+(1+rs)3P3P0=(1+rs)1D1+(1+rs)2D2+(1+rs)3D3+(1+rs)4P4P0=(1+rs)1D0+(1+rs)2D1+(1+rs)3D2+(1+rs)4D3+(1+rs)4P3P0=(1+rs)1D0+(1+rs)2D1+(1+rs)3D2+(1+rs)4D3+(1+rs)4P4 The firm's horizon value is The firm's intrinsic value is Now it's time for you to practice what you've learned. Suppose that the firm recently paid a dividend $2.20. It expects to have nonconstant growth of 11% for 3 years and then a constant rate of 3% thereafter. The firm's required return is 10%. The firm's horizon, or continuing, value is and its intrinsic value today is