Holt Enterprises recently paid a dividend, D0, of $2.75. It expects to have nonconstant growth of
16% for 2 years followed by a constant rate of 4% thereafter. The firm's required return is 20%. a.
How far away is the horizon date? I. The terminal, or horizon, date is the date when the growth
rate becomes constant. This occurs at the beginning of Year 2. II. The terminal, or horizon, date is
the date when the growth rate becomes constant. This occurs at the end of Year 2. III. The
terminal, or horizon, date is infinity since common stocks do not have a maturity date. IV. 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. V. The terminal, or horizon, date is the date when the
growth rate becomes nonconstant. This occurs at time zero. b. What is the firm's horizon, or
continuing, value? Do not round intermediate calculations. Round your answer to the nearest cent.
$ c. What is the firm's intrinsic value today, P0 ? Do not round intermediate calculations. Round
your answer to the nearest cent. $.
Holt Enterprises recently paid a dividend D0 of 275 It .pdf
1. Holt Enterprises recently paid a dividend, D0, of $2.75. It expects to have nonconstant growth of
16% for 2 years followed by a constant rate of 4% thereafter. The firm's required return is 20%. a.
How far away is the horizon date? I. The terminal, or horizon, date is the date when the growth
rate becomes constant. This occurs at the beginning of Year 2. II. The terminal, or horizon, date is
the date when the growth rate becomes constant. This occurs at the end of Year 2. III. The
terminal, or horizon, date is infinity since common stocks do not have a maturity date. IV. 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. V. The terminal, or horizon, date is the date when the
growth rate becomes nonconstant. This occurs at time zero. b. What is the firm's horizon, or
continuing, value? Do not round intermediate calculations. Round your answer to the nearest cent.
$ c. What is the firm's intrinsic value today, P0 ? Do not round intermediate calculations. Round
your answer to the nearest cent. $
