In: Statistics and Probability
Assume Gillette Corporation will pay an annual dividend of $ 0.68 one year from now. Analysts expect this dividend to grow at 12.3 % per year thereafter until the 55th year. Thereafter, growth will level off at 1.8 %.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 8.6 %?
The value of Gillette's stock is $____________