Assume Gillette Corporation will pay an annual dividend of
$0.65
one year from now. Analysts expect this dividend to grow at
11.7%
per year thereafter until the 4 th year. Thereafter, growth will level off at
2.4%
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
8.9%
? The value of Gillette's stock is
$

◻
(Round to the nearest cent.)

Question

Assume Gillette Corporation will pay an annual dividend of

$0.65

one year from now. Analysts expect this dividend to grow at

11.7%

per year thereafter until the 4 th year. Thereafter, growth will level off at

2.4%

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

8.9%

? The value of Gillette's stock is

$

◻

(Round to the nearest cent.)

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