Assume Gillette Corporation will pay an annual dividend of $0.66 one year from now. Analysts expect...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Assume Gillette Corporation will pay an annual dividend of $0.66 one year from now. Analysts expect this dividend to grow at 12.2% per year thereafter until the 6th year. Thereafter, growth will level off at 2.2% 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 7.5%? Assume Gillette Corporation will pay an annual dividend of $0.66 one year from now. Analysts expect this dividend to grow at 12.2% per year thereafter until the 6th year. Thereafter, growth will level off at 2.2% 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 7.5%?
Expert Answer:
Answer rating: 100% (QA)
To calculate the value of a share of Gillette stock we can use the dividend discount model DDM which ... View the full answer
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Posted Date:
Students also viewed these finance questions
-
In each of several consecutive days of production of cola cans, 500 cans are tested and the numbers of defects each day are listed below. What action should be taken? 20 22 19 17 19 15 16 13 14 14 11...
-
The outer and inner wheels are spun. Assuming that the wheels are independent and the outcomes are equally likely, determine the probability of obtaining. Gold on the outer wheel and a color other...
-
Figure P11.4 shows the position as a function of time for a mass attached to a spring. At what points are? Figure P11.4 ? (a) The magnitude of the momentum of the mass largest,? (b) The kinetic...
-
9. What will the following code print on the console? int main() { } int num = 4; cout < < (num & 3 == 0 ? "first" : "second"); return 0; a. second b. first c. There is a syntax error d. It will...
-
Alternative methods of joint-cost allocation, ending inventories. The Evrett Company operates a simple chemical process to convert a single material into three separate items, referred to here as X,...
-
Tyare Corporation had the following inventory balances at the beginning and end of May: May 1 Raw materials $ 25,500 May 30 $ 30,000 Finished Goods $ 75,000 $ 66,000 Work in Process $ 13,500 $ 16,500...
-
Masses of \(1 \mathrm{~kg}, 3 \mathrm{~kg}\), and \(2 \mathrm{~kg}\) are located at radii \(50 \mathrm{~mm}, 75 \mathrm{~mm}\), and \(25 \mathrm{~mm}\) in the planes \(C, D\), and \(E\),...
-
Presented below are selected transactions at Ridge Company for 2015. Jan. 1 Retired a piece of machinery that was purchased on January 1, 2005. The machine cost $62,000 on that date. It had a useful...
-
Let's presume that Mr. Lopez in your video was arrested for assaulting a police officer who was called to a disturbance on a street near a restaurant. Mr. Lopez was not considered insane after an...
-
Lowes Companies, Inc., is a home improvement company offering a range of products for maintenance, repair, remodeling, and decorating. During the recovery phase since the financial crisis of 2008,...
-
Hw10 Obj B2: Problem 12 Problem Value: 1 point(s). Problem Score: 60%. Attempts Remaining: 6 attempts. (1 point) Use the following graph of the function y = f(x) to complete the table. X f(x) 5 -3-2-...
-
157. Jawless fishes probably evolved around (1) 500 MYA (3) 2 MYA (2) 350 MYA (4) 200 MYA MYA.
-
1. First organism to reach land were :- (1) Sea-weeds (2) Plants (3) Reptiles (4) Amphibia 2. The best evidence in support of organic evolutionare:- (1) Palaentological and evidences from...
-
1. When more than one adaptive radiationsappeared to have occurred in an isolatedgeographical area, this is called as : (1) Convergent evolution (2) Divergent evolution (3) Retrogressive evolution...
-
1. Natural selection where peak gets higher andnarrower is: - (1) Directional selection (2) Disruptive selection (3) Stabilishing selection (4) Random selection 2. Which of the following does not...
-
171. In hardy-weinberg equation, the frequency of all homozygous individuals is represented by. (1) p (3) 2pq (2) q (4) p+q 172. Excess use of herbicides, Pesticides has only resulted in selection of...
-
Find out the coulomb energy difference for mirror nuclei using separation energy.
-
How much more interest will be earned if $5000 is invested for 6 years at 7% compounded continuously, instead of at 7% compounded quarterly?
-
Your company has two divisions: One division sells software and the other division sells computers through a direct sales channel, primarily taking orders over the Internet. You have decided that...
-
Grommit Engineering expects to have net income next year of $20.75 million and free cash flow of $22.15 million. Grommits marginal corporate tax rate is 20%. a. If Grommit increases leverage so that...
-
The risk-free rate is 3% and you believe that the S&P 500s excess return will be 10% over the next year. If you invest in a stock with a beta of 1.2 (and a standard deviation of 30%), what is your...
-
In a particular economy the negative oil price shock occurs in two different time periods, say 1990-1995 and 2000-2005. Assume that these two oil price shocks are similar in nature. Given the same...
-
In this problem you are asked to show that the expectations-augmented Phillips curve (derived in the text using the extended classical model) can be derived using the Keynesian model. Consider a...
-
a. Examine how each of the following affects the natural unemployment rate. (i) The discovery of new energy resources lowers the price of energy, stimulating more industrial activities. (ii) The...
Study smarter with the SolutionInn App