Assume Gillette Corporation will pay an annual dividend of $0.65 one year from now. Analysts expect this dividend to grow at 12.0% per year thereafter until the 5th year.​ Thereafter, growth will level off at 2.0% 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 8.0%​? The value of​ Gillette's stock is ______________ ​​(Round to the nearest​ cent.)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Assume Gillette Corporation will pay an annual dividend of $0.65 one year from now. Analysts expect this dividend to grow at 12.0% per year thereafter until the 5th year.​ Thereafter, growth will level off at 2.0% 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 8.0%​? The value of​ Gillette's stock is ______________
​​(Round to the nearest​ cent.)
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