Kroger paid a dividend of $6.00 per share to its stockholders yesterday. you expect its dividend to increase by 10% per year for the next two years before setting into a constant growth rate of 3% per year forever. You believe that Kroger stockholders require a 12% rate of return and its bondholders require a 7% rate of return. 

If the market value of Kroger's bond is $800 millionerd Kroger has 500 million shares of stock outstanding, what should the price of its stock be based on the dividend discount model?

Answer rating: 100% (QA)

To calculate the price of Krogers stock using the dividend discount model well first find the future ... View the full answer