Assume that Cola Company has a share price of $43 The firm will pay a dividend of $1 24 in one year, and you expect Cola Co to raise this dividend by approximately 7 per year in perpetuity a If Cola Co s equity cost of capital is 8 , what share price would you expect based on your estimate of the d...

Plan Compute Colas stock price and future dividend growth ra ...

Assume that Cola Company has a share price of $43. The firm will pay a dividend of

Question:

Assume that Cola Company has a share price of $43. The firm will pay a of $1.24 in one year, and you expect Cola Co. to raise this by approximately 7% per year in perpetuity.
a. If Cola Co.’s equity is 8%, what share price would you expect based on your estimate of the growth rate?
b. Given Cola Co.’s share price, what would you conclude about your assessment of Cola Co.’s future growth?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...