Assume Highline Company has just paid an annual dividend of $0.92. Analysts arepredicting an 11.8% per year growth rate in earnings over the next five years.After then, Highline's earnings are expected to grow at the current industry average of5.2% per year. If Highline's equity cost of capital is 9.4% per year and its dividendpayout ratio remains constant, for what price does the dividend-discount model predictHighline stock should sell?

Stock price under dividend discount model will be the present value of all dividends and present…

Answered: Assume Highline Company has just paid…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 4P

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