What is the intrinsic value of the target firm be today

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Ginthel Inc., a growing conglomerate, has decided to build up another factory for accommodating the increase in aggregate demand and expected to start to operate in the beginning of year three. Assume there is no growth of the dividend before the factory starting to operate. Analysts predict that the firm will grow at an extraordinary rate of 35% for 2 years after the new factory started to be operated, followed by another 2 years of unusual growth of 20%, and finally grow at 6% annual rate for an indefinite number of years. The company just paid a dividend of RM1.00 per ordinary share. The required rate of return for the companies with same nature of business is 12%. What is the intrinsic value of the target firm be today?

Reference no: EM132594574

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