Assume Gillette Corporation will pay an annual dividend of $ 0.64 one year from now. Analysts expect this dividend to grow at 11.3 % per year thereafter until the 5th year. Thereafter, growth will level off at 1.9 % per year. According to the dividend - discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 7.4 % ?
Assume Gillette Corporation will pay an annual dividend of $ 0.64 one year from now. Analysts expect this dividend to grow at 11.3 % per year thereafter until the 5th year. Thereafter, growth will level off at 1.9 % per year. According to the dividend - discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 7.4 % ?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 2P
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