Hart Enterprises recently paid a dividend, D0, of $3.50. It expects to have nonconstant growth of 22% for 2 years followed by a constant rate of 4% thereafter. The firm's required return is 10%.
How far away is the horizon date?
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.
The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of Year 2.
-Select-IIIIIIIVVItem 1
What is the firm's horizon, or continuing, value? Round your answer to two decimal places.
$
What is the firm's intrinsic value today, P0? Round your answer to two decimal places.
Hart Enterprises recently paid a dividend, D0, of $3.50. It expects to have nonconstant growth of 22% for 2 years followed by a constant rate of 4% thereafter. The firm's required return is 10%.
How far away is the horizon date?
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.
The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of Year 2.
-Select-IIIIIIIVVItem 1
What is the firm's horizon, or continuing, value? Round your answer to two decimal places.
$
What is the firm's intrinsic value today, P0? Round your answer to two decimal places.
Related questions
Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 7% rate. Dozier's WACC is 13%.
| Year | 0 | 1 | 2 | 3 | ||||
| ....... | ....... | ....... | ....... | ....... | ....... | ....... | ....... | |
| FCF ($ millions) | ....... | ....... | ....... | ....... | ....... | ....... | ....... | ...... |
| NA | - 20 | 22 | 56 | |||||
What is Dozier's terminal, or horizon, value? Round your answer to two decimal places.
(Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.)
âââ
What is the firm's value today? Round your answer to two decimal places.
âââ
Suppose Dozier has $33 million of debt and 24 million shares of stock outstanding. What is your estimate of the price per share? Round your answer to two decimal places.
