Dividend Discount Model
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Please do not submit any financial statements-just the answers and any calculations.
Use the Kellogg Company 10-Q for Q1 ending 2004-03-27:
http://edgarscan.pwcglobal.com/servlets/getFilingDetail?accession=0000055067-04-000184
Use the dividend discount model (DDM) to calculate the price of Kellogg common equity.
Guidelines:
- Use annual dividends in your model.
- Assume a growth rate of 10% for the first four years.
- In year five (and thereafter) assume a growth rate of 2% per annum for the dividend.
- Use a discount rate of 12%
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Solution Summary
This solution uses the dividend discount model (DDM) to calculate the price of a common equity.
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