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    Dividend discount model - value of Gillette stock

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    Gillette has announced that it will pay an annual dividend of $0.65 one year from now. Analysts expect this dividend to grow at 12% per year thereafter through the fifth year. After the fifth year, growth will level off at 2% per year. Applying the dividend discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 8%?

    © BrainMass Inc. brainmass.com June 3, 2020, 10:33 pm ad1c9bdddf
    https://brainmass.com/business/finance/using-the-divdend-discount-model-what-is-the-value-of-gillette-stock-237381

    Solution Summary

    The solution examines the dividend discount model to determine the value of Gillette Stock.

    $2.19

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