Chapter 7 | Question 7: Please answer the following questions below (see image):

Assume Gillette Corporation will pay an annual dividend of

$0.64

one year from now. Analysts expect this dividend to grow at

11.9%

per year thereafter until the

6th

year. Thereafter, growth will level off at

1.9%

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

7.1%?

Assume Gillette Corporation will pay an annual dividend of $0.64 one year from now. Analysts expect this dividend to grow at 11.9% per year thereafter until the 6th year. Thereafter, growth will level off at 1.9 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 7.1% ? The value of Gillette's stock is . (Round to the nearest cent.)