Gillette Corporation will pay an annual dividend of $0.69 one year from now. Analysts expect this dividend to grow at 11.9% per year thereafter until the 4th year. Thereafter, growth will level off at 1.7% per year. According to the dividend-discount model, what is the value of a Gillette share if the firm's equity cost of capital is 8.5%? The value of a Gillette share is $ (Round to the nearest cent.)

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
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Gillette Corporation will pay an annual dividend of $0.69 one year from now Analysts expect this dividend to grow at
11.9% per year thereafter until the 4th year. Thereafter, growth will level off at 1.7% per year. According to
the dividend-discount model, what is the value of a Gillette share if the firm's equity cost of capital is 8.5%?
The value of a Gillette share is $
(Round to the nearest cent.)
Transcribed Image Text:Gillette Corporation will pay an annual dividend of $0.69 one year from now Analysts expect this dividend to grow at 11.9% per year thereafter until the 4th year. Thereafter, growth will level off at 1.7% per year. According to the dividend-discount model, what is the value of a Gillette share if the firm's equity cost of capital is 8.5%? The value of a Gillette share is $ (Round to the nearest cent.)
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