Hart Enterprises recently paid a dividend, D0, of $1.25. It expects to have non-constant growth of...

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Hart Enterprises recently paid a dividend, D0, of $1.25. It expects to have non-constant growth of...

Hart Enterprises recently paid a dividend, D0, of $1.25. It expects to have non-constant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm's required return is 8%. What is the firm's intrinsic value today?

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Answer 1

Answer #1

Year Cash flows $1.50 $1.80 pv @8% 0.9259 0.8573 0.8573 Present value $1.39 $1.54 $54.01 $56.94 Price at year 2 (1.80*1.05)/(

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