Exercise 2 (30 points): Procter & Gamble will pay an annual dividend of $2 one year from now. Analysts expect this divid
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Exercise 2 (30 points): Procter & Gamble will pay an annual dividend of $2 one year from now. Analysts expect this divid
company, just paid a dividend of $1.50. You expect iDoc to increase its dividends by 10% per year for the next two years through Year 2), and thereafter by 3% per year. The appropriate annual discount rate equity cost of capital) for iDoc is 8%. (a) Use the Gordon Growth model to estimate the share price of Doc right W. Le in Your O. (b) What is the expected share price of iDoc in Your 1?
Exercise 2 (30 points): Procter & Gamble will pay an annual dividend of $2 one year from now. Analysts expect this dividend to grow at 12% per year thereafter until the fifth year. After then, growth will level off at 2% per year. What is the value of a share of Procter & Gamble stock if the firm's equity cost of capital is 10%? Exercise 3 (20 points): (a&b 10 points each): Now is Year OiDoc, a health service