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Estimate the markets expected growth in dividends

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Question 1: Mattel, Inc. was trading at a price of $29.19 per common share at December 31, 2015. Using the Gordon growth model, estimate the market's expected growth in dividends that is required to yield the $29.19 price per common share. Assume that the current dividend per share is $1.52 and is expected to grow thereafter, and that the cost of equity capital is 8.0%. (Hint: Use the equation for the dividend discount model with increasing perpetuity, at the top of page 12-20.)

Round answer to one decimal place (ex: 0.0235 = 2.4%).

Note: Assume current dividend per share is the dividend amount when the constant growth period begins.

Reference no: EM132506588

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