Question: E12-32. Estimating Stock Value Using Dividend Discount Model with Constant Perpetuity Kellogg pays $2.28 in annual per share dividends to its common stockholders, and its

E12-32. Estimating Stock Value Using Dividend Discount Model with Constant Perpetuity

E12-32. Estimating Stock Value Using Dividend Discount Model with Constant Perpetuity Kellogg pays $2.28 in annual per share dividends to its common stockholders, and its recent stock price was $62.50. Assume that Kellogg's cost of equity capital is 6.4%. Required a. Estimate Kellogg's stock price using the dividend discount model with constant perpetuity. b. Compare the estimate obtained in part a with Kellogg's observed price. What does the difference between these amounts imply about Kellogg's future growth

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