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Assume Highline Company has just paid an annual dividend of $0.94. Analysts are predicting an 10.9% per year growth rate in earnings over the next
Assume Highline Company has just paid an annual dividend of
$0.94.
Analysts are predicting an
10.9%
per year growth rate in earnings over the next five years. After then, Highline's earnings are expected to grow at the current industry average of
5.7%
per year. If Highline's equity cost of capital is
8.3%
per year and its dividend payout ratio remains constant, for what price does the dividend-discount model predict Highline stock should sell?
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