Assume Highline Company has just paid an annual dividend of $0.98. Analysts are predicting an 11.2% per year growth rate in earnings over the next five years. After​ then, Highline's earnings are expected to grow at the current industry average of 5.5% per year. If​ Highline's equity cost of capital is 9.2% per year and its dividend payout ratio remains​ constant, for what price does the​ dividend-discount model predict Highline stock should​ sell? The value of​ Highline's stock is $_____

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 Highline Company has just paid an annual dividend of $0.98. Analysts are predicting an 11.2% per year growth rate in earnings over the next five years. After​ then, Highline's earnings are expected to grow at the current industry average of 5.5% per year. If​ Highline's equity cost of capital is 9.2% per year and its dividend payout ratio remains​ constant, for what price does the​ dividend-discount model predict Highline stock should​ sell?

The value of​ Highline's stock is $_____. (Round to the nearest​ cent.)

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