Colgate-Palmolive Company has just paid an annual dividend of $1.50. Analysts are predicting dividends to grow by

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Colgate-Palmolive Company has just paid an annual dividend of $1.50. Analysts are predicting dividends to grow by $0.12 per year over the next five years. After then, Colgate’s earnings are expected to grow 6% per year, and its dividend payout rate will remain constant. If Colgate’s equity cost of capital is 8.5% per year, what price does the dividend-discount model predict Colgate stock should sell for today?

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Corporate Finance The Core

ISBN: 9781292158334

4th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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