What is the firm horizon or continuing and value

Assignment Help Financial Management

Reference no: EM131905324

Holt Enterprises recently paid a dividend, D0, of $2.25. It expects to have nonconstant growth of 12% for 2 years followed by a constant rate of 8% thereafter. The firm's required return is 19%.

How far away is the horizon date?

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

2) 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.

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

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

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

___

What is the firm's horizon, or continuing, value? Round your answer to two decimal places. Do not round your intermediate calculations.

What is the firm's intrinsic value today, P0? Round your answer to two decimal places. Do not round your intermediate calculations.

Reference no: EM131905324

Questions Cloud

What is pretax required return on gordon stock : If the aftertax expected returns on the two stocks are equal (because they are in the same risk class), what is the pretax required return on Gordon’s stock?

What is the stock value per share : If Scampini has 50 million shares of stock outstanding, what is the stock's value per share?

Maximum value that you are willing to pay for bond : what is the maximum value that you are willing to pay for this bond?

Constant rate is stock expected to grow after year : At what constant rate is the stock expected to grow after Year 3?

What is the firm horizon or continuing and value : How far away is the horizon date? What is the firm's horizon, or continuing, value? What is the firm's intrinsic value today, P0?

Considering project that has cash flow and wacc data : Ellmann Systems is considering a project that has the following cash flow and WACC data.

Find the finance charge on bill : The interest on the average daily balance is 1.9% per month. Find the finance charge on the June 5 bill.

The parties in the customary way unless otherwise noted : The various closing costs will be allocated between the parties in the customary way unless otherwise noted.

What is new value of portfolio-return did portfolio earn : You are considering how to invest part of your retirement savings. What is the new value of the portfolio? What return did the portfolio earn?

User Account

All Pages