Question
| Year |
Dividend
per share |
Number of shares |
Share price, end of year |
| 2001 |
0.21 |
4,125,000 |
21.00 |
| 2002 |
0.25 |
4,000,000 |
20.50 |
| 2003 |
0.27 |
3,800,000 |
22.00 |
| 2004 |
0.32 |
3,800,000 |
21.80 |
| 2005 |
0.37 |
3,750,000 |
22.30 |
Part A. Estimate the constant annual compounding growth rate based on the dividends 2001 through 2005.
Anticipated dividend growth rate:
Part B. Use the Gordon dividend model to estimate the cost of equity
Gordon model cost of equity, rE: