Ostion Help Assume Gilette Corporation will pay an annual dividend of $0.63 one year from now. Analysts expect this dividend to grow at 114% per year thereafter the 4th year. There growth will level off at 18% per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 7.257 The value of Gillette's stock is $6. (Round to the nearest cent.) ment 3 8 of 10 (7 complete) di to X That's incorrect. the To determine the value of a share of Gillette stock, follow these steps: First, to find the value of the first 4 dividend payments, use the following formula: Div 1 PV1-4- x{ E-9 Next, to determine the value at year 4 of the rest of the dividend payments, use the following formula: PVA- Divs E-9 Then, discount the above value to the present using this formula: PVA PV = (1+r)" Finally, to determine the value of Gillette's stock, use the following formula: Po - PV14 + PV OK then Clear All