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A stock will pay a dividend next year (D1) of $3. Dividends will grow at a rate of 13% per year
for five years (years 2-6), then grow at 3% per year thereafter (years 7+). The required return on
the stock (rs) is 14% per year. What is the value of the horizon value (aka "terminal value") at
year six (HV6)?

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A stock will pay a dividend next year (D1) of $3. Dividends will gro.pdf

  • 1. A stock will pay a dividend next year (D1) of $3. Dividends will grow at a rate of 13% per year for five years (years 2-6), then grow at 3% per year thereafter (years 7+). The required return on the stock (rs) is 14% per year. What is the value of the horizon value (aka "terminal value") at year six (HV6)?