Hogwarts intrinsic value

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Hogwarts Inc. recently paid a dividend (D0) of $2.50. Ant Man, the CFO for Hogwarts Inc. expects to have non-constant growth of 12% for 2 years followed by a constant rate of 3% thereafter. What will be Hogwarts required rate/return if 12%.

Calculate what Hogwarts intrinsic value is - P^0 (P-hat subscript 0)?

(Hint: you first need to calculate up to year 2, and then calculate the horizon value that starts at the end of year 2 - two-step process) (From there, you calculate the NPV by inputting the CF's - not that many CF's)

Reference no: EM133113221

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