Gillette Corporation will pay an annual dividend of Rs 0.65/ share one year from now. Analysts expect this dividend to grow at a rate of 12% per year until the 5th year. After that period; the growth rate will level up at a rate of 2% per year. According to the Dividend Growth Model, what is the value of a share of Gillette Corporation if the firm's cost of equity is 8%.

Gillette Corporation will pay an annual dividend of Rs 0.65/ share one year from now. Analysts expect this dividend to grow at a rate of 12% per year until the 5th year. After that period; the growth rate will level up at a rate of 2% per year. According to the Dividend Growth Model, what is the value of a share of Gillette Corporation if the firm's cost of equity is 8%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 12P

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