1. THE GORDON MODEL COST OF EQUITY

Current share price, P0 = 60

Current dividend, D0 = 3

Anticipated dividend growth rate = 12%

Gordon model cost of equity, rE = ?

Gordon model cost of equity, rE

2.

COMPUTING JOHNSON &JOHNSON'S TE BASED ON DIVIDENDS PER 1 SHARE 2 JNJ's stock price, P., 31 Dec 2005 61.07 3 Current dividend 1 Quarterly 5 Annualized dividend, Divo 5 - Dividend growth rate, g Quarterly Annualized B Growth since 17-Nov-00 2 Growth since 14-Nov-03 0 1 Gordon model cost of equity re 2 Growth since 17-Nov-00 3 Growth since 14-Nov-03 4 5 Date Dividend per share 6 17-Nov-00 0.160 7 15-Feb-01 0.160 8 18-May-01 0.180 9 17-Aug-01 0.180 0 16-Nov-01 0.180 1 14-Feb-02 0.180 2 17-May-02 0.205 3 16-Aug-02 0.205 4 15-Nov-02 0.205 5 13-Feb-03 0.205 6 16-May-03 0.240 7 15-Aug-03 0.240 8 14-Nov-03 0.240 9 12-Feb-04 0.240 0 14-May-04 0.285 1 13-Aug-04 0.285 2 12-Nov-04 0.285 3 11-Feb-05 0.285 4 13-May-05 0.330 5 19-Aug-05 0.330 6 18-Nov-05 0.330 7