Dividend payout ratio is expected to remain constant

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McDonald’s last year EPS was $5.55 and it is expected to grow at 2% for next 2 years and at 1.5% for next 2 years. Year 4 dividend is expected to grow at a 1% in perpetuity. Dividend payout ratio is expected to remain constant at 60%. If cost of equity is 4.1%, what is the best estimate of Mc Donald’s stock price?

Reference no: EM13874764

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