Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134408897
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 9, Problem 12P
Procter and Gamble (PG) paid an annual dividend of $1.72 in 2009. You expect PG to increase its dividends by 8% per year for the next five years (through 2014), and thereafter by 3% per year. If the appropriate equity cost of capital for Procter and Gamble is 8% per year, use the dividend-discount model to estimate its value per share at the end or 2009.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Procter and Gamble (PG) paid an annual dividend of $2.81 in 2018. You expect PG to increase its dividends by
8.6% per year for the next five years (through 2023), and thereafter by 3.1% per year. If the appropriate equity cost
of capital for Procter and Gamble is 8.1% per year, use the dividend-discount model to estimate its value per share
at the end of 2018.
The price per share is $
(Round to the nearest cent.)
Procter and Gamble (PG) paid an annual dividend of $2.86 in 2018. You expect PG to increase its dividends by 8.7% per year for the next five years (through 2023), and thereafter by 2.7% per year. If the appropriate equity cost of capital for Procter and Gamble is 8.3% per year, use the dividend-discount model to estimate its value per share at the end of 2018.
Procter and Gamble (PG) paid an annual dividend of $2.79 in 2018. You expect PG to increase its dividends by 7.9% per year for the next five years (through 2023), and thereafter by 2.7% per year. If the appropriate equity cost of capital for Procter and Gamble is 8.9% per year, use the dividend-discount model to estimate its value per share at the end of 2018.
Chapter 9 Solutions
Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Ch. 9.1 - How do you calculate the total return of a stock?Ch. 9.1 - Prob. 2CCCh. 9.2 - In what three ways can a firm increase its future...Ch. 9.2 - Under what circumstances can a firm increase its...Ch. 9.3 - How does the growth rate used in the total payout...Ch. 9.3 - Prob. 2CCCh. 9.3 - Prob. 3CCCh. 9.4 - Prob. 1CCCh. 9.4 - What implicit assumptions are made when valuing a...Ch. 9.5 - State the efficient market hypothesis.
Ch. 9.5 - Prob. 2CCCh. 9 - Assume Evco, Inc., has a current price of 50 and...Ch. 9 - Anle corporation has a current price of 20, is...Ch. 9 - Suppose Acap Corporation will pay a dividend of...Ch. 9 - Prob. 4PCh. 9 - NoGrowth Corporation currently pays a dividend of...Ch. 9 - Summit Systems will pay a dividend of 1.50 this...Ch. 9 - Prob. 7PCh. 9 - Canadian-based mining company EI Dorado Gold (EGO)...Ch. 9 - In 2006 and 2007, Kenneth Cole Productions (KCP)...Ch. 9 - DFB, Inc., expects earnings at the end of this...Ch. 9 - Cooperton Mining just announced it will cut its...Ch. 9 - Procter and Gamble (PG) paid an annual dividend of...Ch. 9 - Colgate-Palmolive Company has just paid an annual...Ch. 9 - Prob. 14PCh. 9 - Halliford Corporation expects to have earnings...Ch. 9 - Prob. 16PCh. 9 - Maynard Steel plans to pay a dividend of 3 this...Ch. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Suppose that In January 2006, Kenneth Cole...Ch. 9 - In addition to footwear, Kenneth Cole Productions...Ch. 9 - You read in the paper that Summit Systems from...Ch. 9 - Prob. 31PCh. 9 - Prob. 32PCh. 9 - Prob. 33P
Additional Business Textbook Solutions
Find more solutions based on key concepts
The executive vice-president in charge of finance believes the price will not fall in proportion to the size of...
Foundations Of Finance
How the delta of a call changes when there is an increase in the stock price. Introduction: A delta is characte...
Corporate Finance
The major benefits of the debt financing and its effect on the company’s cost of debt. Introduction: The capita...
Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
Real options and its types. Introduction: The net present value is the variation between present cash inflows v...
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
(NPV calculation) Calculate the NPV given the following free cash flows if the appropriate required rate of ret...
Foundations of Finance (9th Edition) (Pearson Series in Finance)
Support-department cost allocation; direct and step-down methods. Phoenix Partners provides management consulti...
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Procter and Gamble (PG) paid an annual dividend of $2.89 in 2018. You expect PG to increase its dividends by 7.7% per year for the next five years (through 2023), and thereafter by 3.3% per year. If the appropriate equity cost of capital for Procter and Gamble is 8.7% per year, use the dividend-discount model to estimate its value per share at the end of 2018. (Round to the nearest cent.)arrow_forwardProcter and Gamble (PG) paid an annual dividend of $2.87 in 2018. You expect PG to increase its dividends by 8% per year for the next five years (through 2023), and thereafter by 3% per year. If the appropriate equity cost of capital for Procter and Gamble is 8% per year, use the dividend-discount model to estimate its value per share at the end of 2018. A) Calculate the present value of dividends through 2023. B) Calculate the present value of the rest of the dividends in 2023 C) USING the function PV in EXCEL, calculate the present value of the rest of the dividends in 2018 D) Calculate the value per share of Procter and Gamble at the end of 2018 **Show the work and stepsarrow_forwardProcter and Gamble (PG) paid an annual dividend of $2.79 in 2021. You expect PG to increase its dividends by 7.6% per year for the next five years (through 2026), and thereafter by 3.3% per year. If the appropriate equity cost of capital for Procter and Gamble is 8.4% per year, use the dividend-discount model to estimate its value per share at the end of 2021.arrow_forward
- HighGrowth Company has a stock price of $20. The firm will pay a dividend next year of $1, and its dividend is expected to grow at a rate of 4% per year thereafter. What is your estimate of HighGrowth’s cost of equity capital?arrow_forwardHighGrowth Company has a stock price of $18. The firm will pay a dividend next year of $1.15, and its dividend is expected to grow at a rate of 3.5% per year thereafter. What is your estimate of HighGrowth's cost of equity capital? The required return (cost of capital) of levered equity is%. (Round to one decimal place.)arrow_forwardSlow 'n Steady, Inc., has a stock price of $28, will pay a dividend next year of $2.95, and has expected dividend growth of 1.7% per year. What is your estimate of Slow 'n Steady's cost of equity capital? The required return (cost of capital) of levered equity is%. (Round to one decimal place.)arrow_forward
- Gremlin Industries will pay a dividend of $1.65 per share this year. It is expected that this dividend will grow by 5% per year each year in the future. The current price of Gremlin's stock is $22.20 per share. What is Gremlin's equity cost of capital?arrow_forwardGillette Corporation will pay an annual dividend of $0.61 one year from now. Analysts expect this dividend to grow at 11.4% per year thereafter until the 5th year. Thereafter, growth will level off at 2.2% per year. According to the dividend discount model, what is the value of a Gillette share if the firm's equity cost of capital is 8.9% ?arrow_forwardSummit Systems will pay a dividend of $1.50 this year. If you expect Summit’s dividend to grow by 6% per year, what is its price per share if its equity cost of capital is 11%?arrow_forward
- Summit Systems will pay a dividend of $1.49 one year from now. If you expect Summit's dividend to grow by 6.9% per year, what is its price per share if its equity cost of capital is 11.8% ?arrow_forwardSummit Systems will pay an annual dividend of $1.48 this year. If you expect Summit's dividend to grow by 5.3% per year, what is its price per share if the firm's equity cost of capital is 11.6%? The price per share is $ (Round to the nearest cent) CZONarrow_forwardNext year, BHH Co. is expected to pay a dividend of $3.12 per share from earnings of $4.98 per share. The equity cost of capital for BHH is 12.3%. What should BHH's forward P/E ratio be if its dividend growth rate is expected to be 4.2% for the foreseeable future? The forward P/E ratio is (Round to two decimal places.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Dividend explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=Wy7R-Gqfb6c;License: Standard Youtube License