Unformatted text preview: and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac’s dividends? b. What is the expected growth rate of Dorpac’s share price? 4. Gillette Corporation will pay an annual dividend of $0.65 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. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm’s equity cost of capital is 8%?...
View Full Document
- Fall '08
- Dividend yield, Price per share, Krell Industries, Gillette Corporation