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 Colas equity cost of capital is 8 , what share price would you expect based on your estimate of the divid...

a As per Dividend Discount Model Price of a share Di ...

In mid-2012, Coca-Cola Company (KO) had a share price of $39. Its dividend was $1.00 per year,

Question:

In mid-2012, Coca-Cola Company (KO) had a share price of $39. Its was $1.00 per year, and you expect Coca-Cola to raise this by approximately 7% per year in perpetuity.
a. If Coca-Cola’s equity is 8%, what share price would you expect based on your estimate of the growth rate?
b. Given Coca-Cola’s share price, what would you conclude about your assessment of Coca-Cola’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...