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    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:

    Use the dividend discount model (DDM) to calculate the price of Kellogg common equity.

    - 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.