EBK CORPORATE FINANCE
EBK CORPORATE FINANCE
4th Edition
ISBN: 8220103164535
Author: DeMarzo
Publisher: PEARSON
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Chapter 9, Problem 13P

Colgate-Palmolive Company has just paid an annual dividend of $.50. Analysts are predicting dividends to grow by $0.12 per year over the next five years. After then, Colgate’s earnings are expected to grow 5% per year, and its dividend payout rate will remain constant. If Colgate’s equity cost of capital is 8.5% per year, what price does the dividend-discount model predict Colgate stock should sell for today?

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EBK CORPORATE FINANCE

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Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY