What price does the dividend-discount model predict

Assignment Help Financial Management

Reference no: EM131185049

Colgate-palmolive company has just paid an annual dividend of $1.04. Analysts are predicting a(n) 11.9% year growth rate in earnings over the next five years. after that, colgates earnings are expetected to grow at the current industry average of 6.3%per year. If Colgates equity cost of capital is 7.1% per year and its dividend payout ration remains constant, what price does the dividend-discount model predict colgate stock should sell for?

Reference no: EM131185049

Questions Cloud

Using existing budget-create new budget for next fiscal year : Using the existing budget, create a new budget for the next fiscal year. Set out the details of all the assumptions you needed in order to build this budget. 2. Use the “Checklist for Building a Budget” (Exhibit 15–2) and critique your own effort. 3...

Part of the original modigliani and miller model : Which of the following assumptions was not part of the original Modigliani and Miller Model?

Defined in terms of variation in firms operating performance : Business risk, as defined in terms of variation in a firm’s operating performance and measured by EBIT, would be effected by variation in all of the following, except:

What is relationship between a stated interest rate and APR : What is APR? what is the relationship between a stated interest rate and an APR? If stated rate is 4% per year , calculate the APR when interest rate is compounded (a) annually and (b) monthly ?

What price does the dividend-discount model predict : Colgate-palmolive company has just paid an annual dividend of $1.04. Analysts are predicting a(n) 11.9% year growth rate in earnings over the next five years. after that, colgates earnings are expetected to grow at the current industry average of 6.3..

How much is your organization losing per year : Your organization sees 100,000 patients in its emergency room (ER). The rate of patients that leave your ER without being seen (LWBS) is 4%. Data shows that 20% of patients seen are usually admitted. The financial input per 1 admitted patient is $10,..

Firms correctly computed capital structure consists : A firm's correctly computed capital structure consists of 20% debt, 10% preferred stock, and 70% equity. If new debt of $3 million can be raised at the current interest rate before a higher yield must be paid to investors, at what point will the MCC ..

What are the operating costs you took into consideration : How would you justify a capital purchase to your vice president as to why the purchase would be a good investment for the hospital. What are the operating costs you took into consideration, what facility considerations are involved regarding this new..

Financially sound and compare potential rewards versus risks : A business idea may sound great in theory; however, it may not be easy to implement or be successfully received by the market. Develop a three- to four-page paper, not including the title and reference pages, that includes a venture screening invento..

User Account

All Pages