The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.40 per share on i

Question

The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.40 per share on its stock. The dividends are expected to grow at a constant rate of 7 percent per year indefinitely. If investors require an 12 percent return on The Jackson-Timberlake Wardrobe Co. stock, the current price is $___________ . The price will be $____________ in 3 years.

The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.40 per share on its stock. The dividends are expected to grow at a constant rate of 7 percent per year indefinitely. If investors require an 12 percent return on The Jackson-Timberlake Wardrobe Co. stock, the current price is $___________ . The price will be $____________ in 3 years.

Explanation / Answer

price now Po = 1.4*1.07/0.12-0.07 = 29.96

after 3 years

P3 = 1.4 * 1.07^4/0.12-0.07 = 36.70

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