Unformatted text preview: (or we can solve this from Equation 9.2) 4. Value of the first 5 dividend payments is given by PV 15 = $0.65/(0.08 – 0.12) × (1 – (1.12/1.08) 5 ) = $3.24 Value on date 5 of the rest of the dividend payments is given by PV 5 = $0.65 × (1.12) 4 × 1.02 / (0.08 – 0.02) = $17.39 Discounting this value to the present gives PV = $17.39 / (1.08) 5 = $11.83 So the value of Gillette is: P = PV 15 + PV = $3.24 + $11.83 = $15.07....
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 Fall '08
 ILAN
 Dividend, Dividend yield, $0.50, 1.5%, $14.06, $15.07

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