Colgate-Palmolive Company has just paid an annual dividend of $0.91. Analysts are predicting an 10.2% per year growth rate in earnings over the next five years. After that, Colgate's earnings are expected to grow at the current industry average of 5.6% per year. If Colgate's equity cost of capital is 9.3% per year and its dividend payout ratio remains constant, for what price does the DDM predict Colgate stock should sell? The value of Colgate's stock is $. (Round to the nearest cent.)

Colgate-Palmolive Company has just paid an annual dividend of $0.91. Analysts are predicting an 10.2% per year growth rate in earnings over the next five years. After that, Colgate's earnings are expected to grow at the current industry average of 5.6% per year. If Colgate's equity cost of capital is 9.3% per year and its dividend payout ratio remains constant, for what price does the DDM predict Colgate stock should sell? The value of Colgate's stock is $. (Round to the nearest cent.)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section: Chapter Questions

Problem 21P

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