# Question: In mid 2012 Coca Cola Company KO had a share price of

In mid-2012, Coca-Cola Company (KO) had a share price of $39. Its dividend was $1.00 per year, and you expect Coca-Cola to raise this dividend by approximately 7% per year in perpetuity.

a. If Coca-Cola’s equity cost of capital is 8%, 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%, 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?

## Relevant Questions

The figure below shows the one-year return distribution for RCS stock. Calculatea. The expected return.b. The standard deviation of thereturn.Using the data in Table 10.2,a. What was the average annual return of Microsoft stock from 2002–2011?b. What was the annual volatility for Microsoft stock from2002–2011?What if the last two decades had been “normal”? Download the spreadsheet from MyFinanceLab containing the data for Figure 10.1.a. Calculate the arithmetic average return on the S&P 500 from 1926 to 1989.b. Assuming that ...Suppose the market risk premium is 5% and the risk-free interest rate is 4%. Using the data in Table 10.6, calculate the expected return of investing ina. Starbucks’ stock.b. Hershey’s stock.c. Autodesk’s stock.You currently hold a portfolio of three stocks, Delta, Gamma, and Omega. Delta has a volatility of 60%, Gamma has a volatility of 30%, and Omega has a volatility of 20%. Suppose you invest 50% of your money in Delta, and 25% ...Post your question