Puyau Enterprises recently paid a dividend, D 0, of $3.00. It expects to have nonconstant growth of 20 percent for 2 yea...

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Puyau Enterprises recently paid a dividend, D 0, of $3.00. It expects to have nonconstant growth of 20 percent for 2 yea...

Puyau Enterprises recently paid a dividend, D ₀, of $3.00. It expects to have nonconstant growth of 20 percent for 2 years followed by a constant rate of 5 percent thereafter. The firm’s required return is 8 percent. What is the stock’s intrinsic value today?

	a.	$120.00
	b.	$159.12
	c.	$136.67
	d.	$127.06
	e.	$158.24

business finance

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Answer 1

Answer #1

Dividend Present value Year pv@8% $3.60 $3.33 1 0.92593 $4.32 $3.70 2 0.85734 Price at year 2 $151.20 (4.32*1.05)/(0.08-0.05)

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Answer 2

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