Assume Silvio's Steakhouse pays the dividend of $3.95 this year. For the next 35 years, the firm's dividend will grow by 5.8%, then it will grow by 5.4% each year afterwards. The required rate of return for the firm's industry is 11.9%. What is the present value of the firm's stock under the Dividend Discount Model? $67.88 $65.12 $66.78 $65.93

Assume Silvio's Steakhouse pays the dividend of $3.95 this year. For the next 35 years, the firm's dividend will grow by 5.8%, then it will grow by 5.4% each year afterwards. The required rate of return for the firm's industry is 11.9%. What is the present value of the firm's stock under the Dividend Discount Model? $67.88 $65.12 $66.78 $65.93

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

Problem 1PS

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Assume Silvio’s Steakhouse pays the dividend of $3.61 this year. For the next 30 years, the firm’s dividend will grow by 5.4%, then it will grow by 4.8% each year afterwards. The required rate of return for the firm’s industry is 11.6%. What is the present value of the firm’s stock under the Dividend Discount Model? Group of answer choices $50.32 $10.02 $55.33 $60.33
Assume Gillette Corporation will pay an annual dividend of $0.61 one year from now. Analysts expect this dividend to grow at 11.5% 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 8.4%? The value of Gillette's stock is $ (Round to the nearest cent.)
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