Share
Explore BrainMass

Hart Enterprises recently paid a dividend, of $1.25. It exp

Hart Enterprises recently paid a dividend, of $1.25. It expects to have nonconstant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm's required return is 10%.

A. How far away is the terminal, or horizon, date?
B. What is the firm's horizon, or terminal, value?
C. What is the firm's intrinsic value today?

Solution Preview

See attached file for proper format.

? Note to student: The answer to this question is based on a combination of my teaching notes from assisting with teaching the same course text you're using, and my own personal calculations. Please use it as a format for your own answers, and use the answer wording as a guide when constructing your own answers. I based my information on ...

Solution Summary

Hart Enterprises recently paid a dividend, of $1.25. It expects to have nonconstant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm's required return is 10%.

A. How far away is the terminal, or horizon, date?
B. What is the firm's horizon, or terminal, value?
C. What is the firm's intrinsic value today?

$2.19