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Suppose that the firm recently paid a dividend D0=$3.25. It expects to have nonconstant growth of gs=9% for 2 years and then a constant rate

image text in transcribed Suppose that the firm recently paid a dividend D0=$3.25. It expects to have nonconstant growth of gs=9% for 2 years and then a constant rate of gn=4% thereafter. The firm's required return is rs=8%. According to the problem walk-through video, what is the formula for the terminal, or continuing value, at the end of year 2 ? P2=rsgD3P2=(1+rs)2D2P2=rsgD2P2=(1+rs)3D3 According to the problem walk-through video, what is the formula for the firm's intrinsic value today? P0=(1+rs)1D1+(1+rs)2D2+P2P0=(1+rs)1D1+(1+rs)2D2+(1+rs)2P2P0=(1+rs)1D1+(1+rs)2D2+(1+rs)3D3+(1+rs)2P2P0=(1+rs)2P2 The firm's horizon value is The firm's intrinsic value is

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