Assume Gillette Corporation will pay an annual dividend of $0.69 one year from now. Analysts expect this dividend to grow at 12.5% per year thereafter until the 6th year. Thereafter, growth will level off at 2.3% 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 7.1%? The value of Gillette's stock is $ (Round to the nearest cent.)
Assume Gillette Corporation will pay an annual dividend of $0.69 one year from now. Analysts expect this dividend to grow at 12.5% per year thereafter until the 6th year. Thereafter, growth will level off at 2.3% 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 7.1%? The value of Gillette's stock is $ (Round to the nearest cent.)
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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![5. Assume Gillette Corporation will pay an annual dividend of $0.69 one year from now. Analysts
expect this dividend to grow at 12.5% per year thereafter until the 6th year. Thereafter, growth
will level off at 2.3% 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 7.1%?
The value of Gillette's stock is $
(Round to the nearest cent.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcb220c35-efcc-4955-803d-82b35e99016b%2F59aff864-b0c9-4e47-a8d7-39dc943a45da%2Fgjb3vtw_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5. Assume Gillette Corporation will pay an annual dividend of $0.69 one year from now. Analysts
expect this dividend to grow at 12.5% per year thereafter until the 6th year. Thereafter, growth
will level off at 2.3% 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 7.1%?
The value of Gillette's stock is $
(Round to the nearest cent.)
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