Question: typed out solutions please no excel You expect PG will pay a dividend of $8 billion and repurchase $7.5 billion of its common shares next
typed out solutions please no excel
You expect PG will pay a dividend of $8 billion and repurchase $7.5 billion of its common shares next year (Year 1) with both expected to grow 5% in Year 2 and 4% in Year 3. If you expect PGs market cap will be $360 billion at the end of Year 3, and you have calculated the cost of equity to be 7.2%, what do you estimate the true value of the companys net worth is now? (First draw a timeline. Assume all cash flows are at year-end.)
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