9.4

Problem 9.04 Click here to read the eBook: Valuing Nonconstant Growth Stocks NONCONSTANT GROWTH VALUATION Holt Enterprises recently paid a dividend, Do thereafter. The firm's required return is 9%. of $1.25 It expects to have nonconstant growth of 18% for 2 years followed by a constant rate of 5% a. How far away is the horizon date? is Year O since the value of a common stock is the present value of all future expected dividends at time zero. 1. The terminal, or horizon, date II. The terminal, or horizon, date is the date when the growth rate becomes nonconstant. This occurs at time zero. IIl The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the beginning of Year 2. IV. The terminal, V. The terminal, or horizon, date is infinity since common stocks do not have a maturity date. or horizon, date is the date when the growth rate becomes.constant. This occurs at the end of Year 2. Select b. What is the firm's horizon, or continuing, value? Round your answer to two decimal places. Do not round your intermediate calculations. c. what is the firm's intrinsic value today, ? Round your answer to two decimal places. Do not round your intermediate calculations