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given D0 = 2
So with growth rate of 20% for 3 years D1 = 2*1.2 = 2.4 : D2 = 2.4*1.2 = 2.88
From year 3, 100% payout So D3 = 5(1.2)^3 = 8.64
Price at the end of year 2 = D3/Re-G
= 8.64/.12-.05
P2= 123.4286
Now pulling D1 D2 and P2 at Y=0
2.4/(1.12) + 2.88/(1.12)^2 + 123.4286/(1.12)^2 = 102.82
Just tell me why we are doing 1.2 cube??
To calculate the EPS of Year 3
Ok ,thankyou .