Question
Coca-Cola Co.'s dividend growth has been about 9% per year. The industry median dividend growth is 7% per year. Assume that Coca-Cola's dividend growth will
Coca-Cola Co.'s dividend growth has been about 9% per year. The industry median dividend growth is 7% per year. Assume that Coca-Cola's dividend growth will continue at 9% for 5 years and then decrease to the industry average. The current dividend is $1.60. The discount rate is 11%.
A. Calculate the dividend of next year.
B. Calculate the dividend in 6 years.
C. Calculate the current value of the dividends for the first 5 years.
D. Calculate the current value of the dividends thereafter.
E. State the stock price of Coca-Cola Co. at the end of trading on 11/5/19. Based on your analysis, indicate if you would buy or sell this stock and why.
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