Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Colgate - Palmolive Company has just paid an annual dividend of $ 1 . 3 1 . Analysts are predicting an 1 1 % per

Colgate-Palmolive Company has just paid an annual dividend of $ 1.31. Analysts are predicting an 11% per year growth rate in earnings over the next five years. After that, Colgate's earnings are expected to grow at the current industry average of 6.2% per year. If Colgate's equity cost of capital is 9.1% per year and its dividend payout ratio remains constant, what price does the dividend-discount model predict Colgate stock should sell for.
The price per share is?
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

American Public School Finance

Authors: William A. Owings, Leslie S. Kaplan

1st Edition

0495807834, 9780495807834

More Books

Students also viewed these Finance questions