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In early 2018, Coca-Cola Company (KO) had a share price of $44.87, and had paid a dividend of $1.48 for the prior year. Suppose
In early 2018, Coca-Cola Company (KO) had a share price of $44.87, and had paid a dividend of $1.48 for the prior year. Suppose you expect Coca-Cola to raise this dividend by approximately 6.7% per year in perpetuity. a. If Coca-Cola's equity cost of capital is 8.3%, what share price would you expect based on your estimate of the dividend growth rate? b. Given Coca-Cola's share price, what would you conclude about your assessment of Coca-Cola's future dividend growth? a. If Coca-Cola's equity cost of capital is 8.3%, what share price would you expect based on your estimate of the dividend growth rate? Coca-Cola's price per share should be $ (Round to the nearest cent.) b. Given Coca-Cola's share price, what would you conclude about your assessment of Coca-Cola's future dividend growth? Given Coca-Cola's share price, it's dividend growth rate should be %. (Round to two decimal places.)
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