What is the terminal or horizon value

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Reference no: EM13911126

Maverick Milling Co. just paid a dividend of $1.00 to its shareholders. The firm is expecting high growth over the next few years and is projecting the dividend to grow by 15% in the first year, 20% in the second year, and $15% in the third year, before slowing down to a constant 3% growth rate from that point forward. If the required return on the stock is 12%, answer the following questions: (a) What is next year’s dividend amount? (b) What is the terminal or horizon value? and (c) What is the intrinsic value (price) of the stock today?

Reference no: EM13911126

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