Explore BrainMass
Share

Explore BrainMass

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

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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?

    © BrainMass Inc. brainmass.com October 10, 2019, 3:48 am ad1c9bdddf
    https://brainmass.com/business/accounting-for-corporations/hart-enterprises-recently-paid-a-dividend-of-1-25-it-exp-436264

    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