11)
Holt Enterprises recently paid a dividend, D0, of
$3.00. It expects to have nonconstant growth of 22% for 2 years
followed by a constant rate of 7% thereafter. The firm's required
return is 14%.
- How far away is the horizon date?
- The terminal, or horizon, date is the date when the growth rate
becomes nonconstant. This occurs at time zero.
- The terminal, or horizon, date is the date when the growth rate
becomes constant. This occurs at the beginning of Year 2.
- The terminal, or horizon, date is the date when the growth rate
becomes constant. This occurs at the end of Year 2.
- The terminal, or horizon, date is infinity since common stocks
do not have a maturity date.
- 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.
-Select-IIIIIIIVVItem 1
- What is the firm's horizon, or continuing, value? Do not round
intermediate calculations. Round your answer to the nearest cent.
$
- What is the firm's intrinsic value today, ? Do not round
intermediate calculations. Round your answer to the nearest cent.
$
12)
Scampini Technologies is expected to generate $125 million in
free cash flow next year, and FCF is expected to grow at a constant
rate of 6% per year indefinitely. Scampini has no debt or preferred
stock, and its WACC is 13%. If Scampini has 50 million shares of
stock outstanding, what is the stock's value per share? Do not
round intermediate calculations. Round your answer to the nearest
cent.
Each share of common stock is worth $ ,
according to the corporate valuation model.