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Assume Gillette Corporation will pay an annual dividend of $0.66 one year from now. Analysts expect this dividend to grow at 11.9% per year thereafter until the 6th year. Thereafter, growth will level off at 2.4% 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 7.5%? The value of Gillette's stock is $ (Round to the nearest cent.) 4

Assume Gillette Corporation will pay an annual dividend of $0.66 one year from now. Analysts expect this dividend to grow at 11.9% per year thereafter until the 6th year. Thereafter, growth will level off at 2.4% 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 7.5%? The value of Gillette's stock is $ (Round to the nearest cent.) 4

Essentials Of Investments
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
Section: Chapter Questions
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Assume Gillette Corporation will pay an annual dividend of $0.66 one year from now. Analysts expect this dividend to grow at 11.9% per year thereafter until the 6th year. Thereafter, growth will level off at 2.4% 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 7.5% ? The value of Gillette's stock is $ (Round to the nearest cent.)
Transcribed Image Text:Assume Gillette Corporation will pay an annual dividend of $0.66 one year from now. Analysts expect this dividend to grow at 11.9% per year thereafter until the 6th year. Thereafter, growth will level off at 2.4% 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 7.5% ? The value of Gillette's stock is $ (Round to the nearest cent.)
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