Assume Highline Company has just paid an annual dividend of $1.02. Analysts are predicting an 10.4% per year growth rate in earnings over the next five years. After then, Highline's earnings are expected to grow at the current industry average of 5.3% per year. If Highline's equity cost of capital is 7.6% per year and its dividend payout ratio remains constant, for what price does the dividend-discount model predict Highline stock should sell? The value of Highline's stock is $53.09. (Round to the nearest cent.)

Assume Highline Company has just paid an annual dividend of $1.02. Analysts are predicting an 10.4% per year growth rate in earnings over the next five years. After then, Highline's earnings are expected to grow at the current industry average of 5.3% per year. If Highline's equity cost of capital is 7.6% per year and its dividend payout ratio remains constant, for what price does the dividend-discount model predict Highline stock should sell? The value of Highline's stock is $53.09. (Round to the nearest cent.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 12P

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