$3-$d$.$ Assume that Temp Force$$s dividend is expected to experience nonconstant growth of $30\%$ from Year $0$ to Year $1,25\%$ from Year $1$ to Year $2,$ and $15\%$ from Year $2$ to Year $3.$ After Year $3,$ dividends will grow at a constant rate of $6\%.$ What is the stock$$s intrinsic value under these conditions? What are the expected dividend yield and capital gains yield during the first year? What are the expected dividend yield and capital gains yield during the fourth year $($from Year $3$ to Year $4)?$

Finding the Value of a Nonconstant Growth Stock

INPUTS:

D$0=$ $$2\mathrm{.}00$ Last dividend the company paid.

rs $=13\mathrm{.}0\%$ Stockholders' required return.

g$0,1=30\%$ Growth rate for Year $1$ only.

g$1,2=25\%$ Growth rate for Year $2$ only.

g$2,3=15\%$ Growth rate for Year $3$ only.

gL $=6\%$ Constant long$-$run growth rate for all years after Year $3.$

Growth rate $30\%25\%15\%6\%6\%$

Year $01234$

Dividends $$2\mathrm{.}60$ $$3\mathrm{.}25$ $$3\mathrm{.}74$ $$3\mathrm{.}96$

PVs of dividends $=$

PV of HV$3$