Bells Inc. is presently enjoying relatively high growth because of a surge in the demand for...

Bells Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 35% for the next 2 years, after which competition will probably slow down the growth rate in earnings and dividends to 15% for year 3 and year 4. After year 4, growth should be a constant 8% per year. The company’s last dividend, D0, was $1.25. The firm's required return is 10%. a) Calculate the non-constant dividends. b) Calculate the firm's horizon value. c) What is the firm's intrinsic value today, P̂ 0?

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jeff jeffy answered 1 year ago

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