Procter and Gamble (PG) paid an annual dividend of $2

According to the question, the current dividend paid ( 2018 ) is $2.88

Now the dividends are to be increased by 7.3% every year, thus we will calcualte the dividends for the coming years.

The formula to do so is:-

D_n = D₀ ( 1 + i )

where D_n = Dividend for perticular year

D₀ = Dividend for 2018

i = Growth rate

D1 = 2.88 ( 1.073 ) = 3.0902

D2 =3.0902 ( 1.073 ) = 3.315

D3 =3.315( 1.073 ) = 3.556

D4 = 3.556 ( 1.073 ) = 3.815

D5 = 3.815 ( 1.073 ) = 4.093

D6 will be for 2024 and the growth rate for that is 2.8%

D6 = 4.093 ( 1.028) = 4.2076

# Finding the present values of all the above dividends. The formula for Present value is given by:-

PV = FV / ( 1 + i )ⁿ

For example,

PV(1) = 3.0902 ( 1.073 )¹ = 2.8799 = 2.88

similarly calculating other values, we get

PV(2) = 2.88

PV(3) = 2.88

PV(4) = 2.88

PV(5) = 2.88

For present value of the dividend for 6th year onward is calculated as:-

{ 4.2076 / ( 0.073 - 0.028 ) ] / ( 1.081 )⁵

63.3422

Adding up all the values of the present years:-

2.88 + 2.88 + 2.88 + 2.88 + 2.88 + 63.3422 = $77.74

Thus the value per share is $77.74