Question:
General Mills (NYSE: GIS) is a large distributor and manufacturer of package consumer food products. Benoit Gagnon, a buy-side analyst covering General Mills, has studied the historical growth rates in sales, earnings, and dividends for GIS, and also has made projections of future growth rates. Gagnon expects the current dividend of 1.10 per share to grow at 6 percent for the next 2 years, and that the growth rate will decline to three percent and remain at that level thereafter.
The risk-free rate is 4%, the market risk premium is 6%, and GIS's beta, consider to be 0.50.
Evaluate the value of one share of GIS stock using Dividends Valuation Approach.