Assume Highline Company has just paid an annual dividend of $3. Analysts are predicting an 11% per year growth rate in earnings over the next three years. After then, Highline's earnings are expected to grow at the current industry average of 4% per year. If Highline's equity cost of capital is 8% 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.)
Assume Highline Company has just paid an annual dividend of $3. Analysts are predicting an 11% per year growth rate in earnings over the next three years. After then, Highline's earnings are expected to grow at the current industry average of 4% per year. If Highline's equity cost of capital is 8% 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.)
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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Transcribed Image Text:Assume Highline Company has just paid an annual dividend of $3. Analysts are predicting an 11% per year growth rate in earnings over the next three years. After then, Highline's earnings are
expected to grow at the current industry average of 4% per year. If Highline's equity cost of capital is 8% 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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