P9-31 (similar to)

In early 2018, Coca-Cola Company (KO) had a share price of

$ 44.77

,

and had paid a dividend of

$ 1.48

for the prior year. Suppose you expect Coca-Cola to raise this dividend by approximately

6.3 %

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

$nothing

.

(Round to the nearest cent.)