User Account

All Pages

Nonconstant growth valuation-how far away is horizon date

Assignment Help Financial Management
Reference no: EM131346650

Nonconstant growth valuation

Hart Enterprises recently paid a dividend, D0, of $3.00. It expects to have nonconstant growth of 16% for 2 years followed by a constant rate of 9% thereafter. The firm's required return is 11%.

How far away is the horizon date?

The terminal, or horizon, date is the date when the growth rate becomes nonconstant. This occurs at time zero.

The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the beginning of Year 2.

The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of Year 2.

The terminal, or horizon, date is infinity since common stocks do not have a maturity date.

The terminal, or horizon, date is Year 0 since the value of a common stock is the present value of all future expected dividends at time zero.

-Select-IIIIIIIVVItem 1

What is the firm's horizon, or continuing, value? Round your answer to two decimal places.

$  

What is the firm's intrinsic value today, P0? Round your answer to two decimal places.

$  

Reference no: EM131346650

Questions Cloud

Environment under which erp system was being implemented : Describe the environment under which the ERP system was being implemented.- Was due diligenence conducted in choosing the ERP Vendor?
Prepare a presentation aimed at the executive team : Prepare a presentation aimed at the executive team of that company that addresses:- you are brought in to address a company in crisis.
Define the problem of hidden exposed terminals : Define the problem of hidden Exposed terminals. What happens in the case of such terminals if Aloha, Slotted Aloha, reservation Aloha or MACA is used?
Introduce yourself and share your current job : Introduce yourself and share your current job and its interface or involvement with the HR Department. For instance, are you a manager with people management responsibilities, or are you an HR practitioner? If you are not yet employed, do you want..
Nonconstant growth valuation-how far away is horizon date : Hart Enterprises recently paid a dividend, D0, of $3.00. It expects to have nonconstant growth of 16% for 2 years followed by a constant rate of 9% thereafter. The firm's required return is 11%. How far away is the horizon date? What is the firm's ho..
Discuss the benefits of hiring an operations manager : John Chip, the owner and CEO of a startup company called Chip's Widgets, Inc., started his company in his garage. He manufactured artistic widgets by hand for the first several years of the company's existence, and he recently expanded his busines..
Determine the meter constant for use : Determine the meter constant for use in Eq. (7.32) and estimate theerror resulting from the use of this relation instead of the exact expression inEq. (7.28).
Define static muscle work and dynamic muscle works : BOS 3071- Define static muscle work and dynamic muscle works. What are some injuries that can be caused by extended static work and how can these injuries be prevented?
Appreciate the valuable role accountant plays : In business, hundreds of documents are received or created every day, so you can appreciate the valuable role an accountant plays. Can you see why most businesses hire people to do this work? Would it be worth the owner's time to do all the paperwork..

Reviews

Write a Review

Financial Management Questions & Answers

  Stock is expected to pay the dividends

A stock is expected to pay the following dividends: $1.30 4 years from now, $1.60 5 years from now, and $1.90 6 years from now, followed by growth in the dividend of 8% per year forever after that point. There will be no dividends prior to year 4. Th..

  Importance of communication in negotiation process

We have discussed the importance of communication in the negotiation process. We reviewed the concept of communication as a sender encoding a message to a receiver who decodes the message and then responds back to the sender

  Raised the maximum amount of short-term funds

The Nelson Company has $1,035,000 in current assets and $450,000 in current liabilities. Its initial inventory level is $360,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can Nelson's short-term..

  Assuming the market is in equilibrium

You are considering an investment in Keller Corp's stock, which is expected to pay a dividend of $2.75 a share at the end of the year (D1 = $2.75) has a beta of 0.9. The risk-free rate is 5.4%, and the market risk premium is 5.0%. Assuming the market..

  Create a project management plan in which include wbs create

Create a Project Management Plan in which you include the following- The WBS created, The activities defined, The sequenced activity chart or diagram and A human resource plan.

  Solve problem by using linear programming computer program

The project manager is advised by the equipment division manager that both heavy and medium dozers are available for the project. - Solve the given problem by using linear programming computer program.

  Premium for financial risk

Ethier Enterprise has an unlevered beta of 1.25. Ethier is financed with 45% debt and has a levered beta of 1.45. If the risk free rate is 5.5% and the market risk premium is 5%, how much is the additional premium that Ethier's shareholders require t..

  Self-employed certified public accountant

Income statement preparation On December 31, 2015, Cathy Chen, a self-employed certified public accountant (CPA), completed her first full year in business. During the year, she billed $360,000 for her accounting services. She had two employees, a bo..

  What is the modified duration at that same time

You just started work at a wealth management firm and your boss asks you to evaluate a 30-year bond with a face value of $1,000 that, according to the prospectus, you can purchase next month (01-June-2016) when it is initially issued. What is the mod..

  Explain the meaning of trade

What factors need to be considered in determining the source of profits of the following businesses?- explain the meaning of "trade" and list out the factors to determine whether a trade exists.

  Hedge the company overall strategy

In what industry does this Amazon operate, and how does it fit into the particular industry? Is it an industry leader? A small player? Does it operate in multiple industries and do the multiple operations complement or hedge the company’s overall str..

  Insurance annuity in order to pay off the winner

Publisher’s Clearing House wants to purchase a $3,500,000 insurance annuity in order to pay off the winner of the $10,000,000 Sweepstakes. The winner will get $500,000 in the first year, $250,000 for the next 28 years and $2,500,000 in the 30th year.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd