Procter and Gamble (PG) paid an annual dividend of $1.72 in 2009. You expect PG to increase its dividends by 8% per year for the next five years (through 2014), and thereafter by 3% per year. If the appropriate equity cost of capital for Procter and Gamble is 8% per year, use the dividend-discount model to estimate its value per share at the end or 2009.
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- Procter and Gamble (PG) paid an annual dividend of $2.79 in 2018. You expect PG to increase its dividends by 7.9% per year for the next five years (through 2023), and thereafter by 2.7% per year. If the appropriate equity cost of capital for Procter and Gamble is 8.9% per year, use the dividend-discount model to estimate its value per share at the end of 2018. * please show workarrow_forwardProcter and Gamble (PG) paid an annual dividend of $2.87 in 2018. You expect PG to increase its dividends by 8% per year for the next five years (through 2023), and thereafter by 3% per year. If the appropriate equity cost of capital for Procter and Gamble is 8% per year, use the dividend-discount model to estimate its value per share at the end of 2018. A) Calculate the present value of dividends through 2023. B) Calculate the present value of the rest of the dividends in 2023 C) USING the function PV in EXCEL, calculate the present value of the rest of the dividends in 2018 D) Calculate the value per share of Procter and Gamble at the end of 2018 **Show the work and stepsarrow_forwardProcter and Gamble (PG) paid an annual dividend of $2.79 in 2021. You expect PG to increase its dividends by 7.6% per year for the next five years (through 2026), and thereafter by 3.3% per year. If the appropriate equity cost of capital for Procter and Gamble is 8.4% per year, use the dividend-discount model to estimate its value per share at the end of 2021.arrow_forward
- HighGrowth Company has a stock price of $20. The firm will pay a dividend next year of $1.03, and its dividend is expected to grow at a rate of 3.6% per year thereafter. What is your estimate of HighGrowth's cost of equity capital? The required return (cost of capital) of levered equity is __ % ? (Round to one decimal place.)arrow_forwardHighGrowth Company has a stock price of $20. The firm will pay a dividend next year of $1, and its dividend is expected to grow at a rate of 4% per year thereafter. What is your estimate of HighGrowth’s cost of equity capital?arrow_forwardSlow 'n Steady, Inc., has a stock price of $28, will pay a dividend next year of $2.95, and has expected dividend growth of 1.7% per year. What is your estimate of Slow 'n Steady's cost of equity capital? The required return (cost of capital) of levered equity is%. (Round to one decimal place.)arrow_forward
- Gremlin Industries will pay a dividend of $1.65 per share this year. It is expected that this dividend will grow by 5% per year each year in the future. The current price of Gremlin's stock is $22.20 per share. What is Gremlin's equity cost of capital?arrow_forwardSummit Systems will pay a dividend of $1.50 this year. If you expect Summit’s dividend to grow by 6% per year, what is its price per share if its equity cost of capital is 11%?arrow_forwardGillette Corporation will pay an annual dividend of $0.61 one year from now. Analysts expect this dividend to grow at 11.4% per year thereafter until the 5th year. Thereafter, growth will level off at 2.2% 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 8.9% ?arrow_forward
- Summit Systems will pay a dividend of $1.49 one year from now. If you expect Summit's dividend to grow by 6.9% per year, what is its price per share if its equity cost of capital is 11.8% ?arrow_forwardThe earnings, dividends, and stock price of Shelby Inc. are expected to grow at 8% per year in the future. Shelby's common stock sells for $30 per share, its last dividend was $1.50, and the company will pay a dividend of $1.62 at the end of the current year. Using the discounted cash flow approach, what is its cost of equity? Round your answer to two decimal places. % If the firm's beta is 1.8, the risk-free rate is 10%, and the expected return on the market is 12%, then what would be the firm's cost of equity based on the CAPM approach? Round your answer to two decimal places. % If the firm's bonds earn a return of 10%, then what would be your estimate of rs using the own-bond-yield-plus-judgmental-risk-premium approach? (Hint: Use the mid-point of the risk premium range.) Round your answer to two decimal places. % On the basis of the results of parts a–c, what would be your estimate of Shelby's cost of equity? Assume Shelby values each approach equally. Round your answer…arrow_forwardSummit Systems will pay an annual dividend of $1.48 this year. If you expect Summit's dividend to grow by 5.3% per year, what is its price per share if the firm's equity cost of capital is 11.6%? The price per share is $ (Round to the nearest cent) CZONarrow_forward
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT