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Procter and Gamble(PG) paid an annual dividend of $1.77 in 2009. You expect PG to increase...

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Finance

Procter and Gamble(PG) paid an annual dividend of $1.77 in 2009.You expect PG to increase its dividends by 7.1% per year for thenext five years(through 2014), and thereafter by 2.7%er year. Ifthe appropriate equity cost of capital for Procter and Gamble is8.2% per year, use the dividend-discount model to estimate itsvalue per share at the end of 2009.

The price per share is _____(two decimal)

Answer & Explanation Solved by verified expert
3.6 Ratings (326 Votes)
Solution The price per share is 3999 Working Notes Using DDM The price per share P0 at end of 2009 P0 D11r1 D21r2 D31r3 D41r4D51r5 P51r5    See Answer
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Procter and Gamble(PG) paid an annual dividend of $1.77 in 2009.You expect PG to increase its dividends by 7.1% per year for thenext five years(through 2014), and thereafter by 2.7%er year. Ifthe appropriate equity cost of capital for Procter and Gamble is8.2% per year, use the dividend-discount model to estimate itsvalue per share at the end of 2009.The price per share is _____(two decimal)

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