Wall Inc. forecasts that it will pay the dividends over the next five years.

	Year 1	Year 2	Year 3	Year 4	Year 5
Dividend per share	$0.50	$0.60	$0.90	$1.00	$1.25

After year 5, Wall Inc. expects that their dividends will grow at a constant rate. Further, after year 5, they plan to have a constant retention rate of 47.5% and earn 10% on any new equity investments they make. You estimate that the cost of equity of Wall Inc. is 14%.

Note: Do not round intermediate calculations.

Which of the following statements regarding the horizon value (terminal value) is correct?

Group of answer choices

The horizon value for Wall Inc. is the value of all future dividends beyond year 5 (i.e., D6 to D) discounted back to t=0.

The horizon value for Wall Inc. is the value of all future dividends beyond year 4 (i.e., D5 to D) discounted back to the end of year 5.

The horizon value for Wall Inc. is the value of all future dividends beyond year 5 (i.e., D6 to D) discounted back to the end of year 6.

The horizon value for Wall Inc. is the value of all future dividends beyond year 5 (i.e., D6 to D) discounted back to the end of year 5.

3. Wall Inc. forecasts that it will pay the dividends over the next five years.

	Year 1	Year 2	Year 3	Year 4	Year 5
Dividend per share	$0.50	$0.60	$0.90	$1.00	$1.25

After year 5, Wall Inc. expects that their dividends will grow at a constant rate. Further, after year 5, they plan to have a constant retention rate of 47.5% and earn 10% on any new equity investments they make. You estimate that the cost of equity of Wall Inc. is 14%.

Note: Do not round intermediate calculations.

Based on this information, what is the long-run constant growth rate of dividends? (i.e., the growth rate of dividends beyond year 5.)

Group of answer choices

6.65%

4.75%

10.00%

1.40%

4. Wall Inc. forecasts that it will pay the dividends over the next five years.

	Year 1	Year 2	Year 3	Year 4	Year 5
Dividend per share	$0.50	$0.60	$0.90	$1.00	$1.25

After year 5, Wall Inc. expects that their dividends will grow at a constant rate. Further, after year 5, they plan to have a constant retention rate of 47.5% and earn 10% on any new equity investments it makes. You estimate that the cost of equity of Wall Inc. to be 14%.

Note: Do not round intermediate calculations.

How much is the horizon value?

Group of answer choices

$18.14

$13.51

$14.16

$17.01

5. Wall Inc. forecasts that it will pay the dividends over the next five years.

	Year 1	Year 2	Year 3	Year 4	Year 5
Dividend per share	$0.50	$0.60	$0.90	$1.00	$1.25

After year 5, Wall Inc. expects that their dividends will grow at a constant rate. Further, after year 5, they plan to have a constant retention rate of 47.5% and earn 10% on any new equity investments they make. You estimate that the cost of equity of Wall Inc. is 14%.

Note: Do not round intermediate calculations.

What is your best estimate for the intrinsic value of a share of Wall Inc. at t=0?

Group of answer choices

$11.48

$11.88

$9.77

$10.10