# Question: Procter Gamble will pay an annual dividend of 0 65

Procter & Gamble will pay an annual dividend of $0.65 one year from now. Analysts expect this dividend to grow at 12% per year thereafter until the fifth year. After then, growth will level off at 2% per year. According to the dividend-discount model, what is the value of a share of Procter & Gamble stock if the firm’s equity cost of capital is 8%?

## Answer to relevant Questions

What is the value of a firm with initial dividend Div, growing for n years (i.e., until year n + 1) at rate g1 and after that at rate g2 forever, when the equity cost of capital is r ?Suppose that in January 2006, Kenneth Cole Productions had EPS of $1.65 and a book value of equity of $12.05 per share.a. Using the average P/E multiple in Table 9.1, estimate KCP's share price.b. What range of share prices ...Repeat Problem 4 assuming that the stock fell $5 to $45 instead.a. Is your capital gain different? Why or why not?b. Is your dividend yield different? Why or why not?Download the spreadsheet from MyFinanceLab containing the data for Figure 10.1.a. Compute the average return for each of the assets from 1929 to 1940 (The Great Depression).b. Compute the variance and standard deviation for ...Consider an economy with two types of firms, S and I. S firms all move together. I firms move independently. For both types of firms, there is a 60% probability that the firms will have a 15% return and a 40% probability ...Post your question