Assume Highline Company has just paid an annual dividend of $0.94. Analysts are predicting an 11.5% per year growth rate in earnings over the next five years. After then, Highline's earnings areexpected to grow at the current industry average of 5.3% per year. If Highline's equity cost of capital is 8.4% per year and its dividend payout ratio remains constant, for what price doesthe dividend-discount model predict Highline stock should sell?The value of Highline's stock is $(Round to the nearest cent.)

The dividend discount model refers to a model where it is assumed that the dividends are the best…

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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