Estimate the terminal value at the end of year three

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You are using a dividend discount model to value Bank D, which is expected to generate a 15% return on equity in perpetuity. The company paid dividends of exist40 million on net income of $ 100 million in the most recent year and is expected to maintain high growth for the next 3 years, before settling Into stable growth, growing 3% a year in perpetuity If the cost of equity is 9%, estimate the terminal value at the end of year 3. Please show your calculations.

a. $ 444 63 million

b. $ 1778.51 million

c. $880.25 million

d. $ 222.31 million

e. None of the above

Reference no: EM131583286

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