Gillette's most recent annual dividend was $8 per share. The company expects the growth of its dividends to be stable at 3% per year going forward. a) If investors require a 9% return, what is the current value of Gillette's stock? (round to nearest cent) b) If the stock currently trades at $116.57 per share, what is the dividend growth rate investors expect? (round to nearest percent) Hint: When the constant-growth formula is solved for the growth variable, it is g = -D/P +r

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 1P
icon
Related questions
Question

Explain how to do in excel please.

| Gillette's most recent annual dividend was $8 per share. The company expects the growth of its dividends to be stable at 3% per
year going forward.
a) If investors require a 9% return, what is the current value of Gillette's stock? (round to nearest cent)
|b) If the stock currently trades at $116.57 per share, what is the dividend growth rate investors expect? (round to nearest percent)
Hint: When the constant-growth formula is solved for the growth variable, it is g = -D/P +r
Transcribed Image Text:| Gillette's most recent annual dividend was $8 per share. The company expects the growth of its dividends to be stable at 3% per year going forward. a) If investors require a 9% return, what is the current value of Gillette's stock? (round to nearest cent) |b) If the stock currently trades at $116.57 per share, what is the dividend growth rate investors expect? (round to nearest percent) Hint: When the constant-growth formula is solved for the growth variable, it is g = -D/P +r
Expert Solution
steps

Step by step

Solved in 3 steps with 4 images

Blurred answer
Knowledge Booster
Investment in Stocks
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Intermediate Financial Management (MindTap Course…
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
Corporate Fin Focused Approach
Corporate Fin Focused Approach
Finance
ISBN:
9781285660516
Author:
EHRHARDT
Publisher:
Cengage
Fundamentals Of Financial Management, Concise Edi…
Fundamentals Of Financial Management, Concise Edi…
Finance
ISBN:
9781337902571
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning