Question: In early 2018, Coca-Cola Company (KO) had a share price of $44.75, and had paid a dividend of $1.51 for the prior year. Suppose you

 In early 2018, Coca-Cola Company (KO) had a share price of

In early 2018, Coca-Cola Company (KO) had a share price of $44.75, and had paid a dividend of $1.51 for the prior year. Suppose you expect Coca-Cola to raise this dividend by approximately 6.9% per year in perpetuity. a. If Coca-Cola's equity cost of capital is 8.4%, what share price would you expect based on your estimate of the dividend growth rate? b. Given Coca-Cola's share price, what would you conclude about your assessment of Coca-Cola's future dividend growth? a. If Coca-Cola's equity cost of capital is 8.4%, what share price would you expect based on your estimate of the dividend growth rate? Coca-Cola's price per share should be $ (Round to the nearest cent.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!