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)

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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)