Question: Estimating Stock Value Using Dividend Discount Model with Constant Perpetuity Kellogg pays $2.00 in annual per share dividends to its common stockholders, and its recent

Estimating Stock Value Using Dividend Discount Model with Constant Perpetuity

Kellogg pays $2.00 in annual per share dividends to its common stockholders, and its recent stock price was $82.50. Assume that Kellogg's cost of equity capital is 5.0%.

a. Estimate Kellogg's stock price using the dividend discount model with constant perpetuity.

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