In early 2018, Coca-Cola Company (KO) had a share price of $42.72, and had paid a dividend of $1.53 for the prior year. Suppose you expect Coca-Cola to raise this dividend by approximately 6.6% per year in perpetuity. a. If Coca-Cola's equity cost of capital is 8.2%, what share price would you expect based on your estimate of the dividend growth rate b. Given Coca-Cola's share price, what would you conclude about your assessment of Coca-Cola's future dividend growth? a. If Coca-Cola's equity cost of capital is 8.2%, what share price would you expect based on your estimate of the dividend growth rate Coca-Cola's price per share should be $ (Round to the nearest cent.) b. Given Coca-Cola's share price, what would you conclude about your assessment of Coca-Cola's future dividend growth? Given Coca-Cola's share price, it's dividend growth rate should be %. (Round to two decimal places.)
In early 2018, Coca-Cola Company (KO) had a share price of $42.72, and had paid a dividend of $1.53 for the prior year. Suppose you expect Coca-Cola to raise this dividend by approximately 6.6% per year in perpetuity. a. If Coca-Cola's equity cost of capital is 8.2%, what share price would you expect based on your estimate of the dividend growth rate b. Given Coca-Cola's share price, what would you conclude about your assessment of Coca-Cola's future dividend growth? a. If Coca-Cola's equity cost of capital is 8.2%, what share price would you expect based on your estimate of the dividend growth rate Coca-Cola's price per share should be $ (Round to the nearest cent.) b. Given Coca-Cola's share price, what would you conclude about your assessment of Coca-Cola's future dividend growth? Given Coca-Cola's share price, it's dividend growth rate should be %. (Round to two decimal places.)
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:In early 2018, Coca-Cola Company (KO) had a share price of $42.72, and had paid a dividend of $1.53 for the prior year. Suppose you
expect Coca-Cola to raise this dividend by approximately 6.6% per year in perpetuity.
a. If Coca-Cola's equity cost of capital is 8.2%, what share price would you expect based on your estimate of the dividend growth rate?
b. Given Coca-Cola's share price, what would you conclude about your assessment of Coca-Cola's future dividend growth?
(...)
a. If Coca-Cola's equity cost of capital is 8.2%, what share price would you expect based on your estimate of the dividend growth rate?
Coca-Cola's price per share should be $
(Round to the nearest cent.)
b. Given Coca-Cola's share price, what would you conclude about your assessment of Coca-Cola's future dividend growth?
Given Coca-Cola's share price, it's dividend growth rate should be %. (Round to two decimal places.)
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