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In early 2018, Coca-Cola Company (KO) had a share price of $45.1, and had paid a dividend of $1.52 for the prior year. Suppose you
In early 2018, Coca-Cola Company (KO) had a share price of $45.1, and had paid a dividend of $1.52 for the prior year. Suppose you expect Coca-Cola to raise this dividend by approximately 6.8% per year in perpetuity. a. If Coca-Cola's equity cost of capital is 8.5%, 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 8.5%, what share price would you expect based on your estimate of the dividend growth rate? Coca-Cola's price per share should be s . (Round to the nearest cent.) S 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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