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Assume Gillette Corporation will pay an annual dividend of $ 0.68 one year from now. Analysts...

Assume Gillette Corporation will pay an annual dividend of $ 0.68 one year from now. Analysts expect this dividend to grow at 12.9 % per year thereafter until the 4th year.​ Thereafter, growth will level off at 1.6 % 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 8.1%​?

The value of gilettes stock is ??

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Answer #1

Ke 1.6% 8.1% 8. 0.68*(1+0.129) 0.68*(1+0.129)^2 D4 0.68*(1+0.129)^3 0.68*(1+0.129)^3*(1+0.016) (Dn/Ke-g) TERMINAL VALUE 0.994

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