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In mid-2015, Coca-Cola Company (KO) had a share price of $41.16, and had paid a dividend of $1.09 for the prior year. Suppose you expect
In mid-2015, Coca-Cola Company (KO) had a share price of $41.16, and had paid a dividend of $1.09 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.)
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