Question

The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.20 per share on its stock. The...

The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.20 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. Investors require a return of 10 percent on the company's stock.

a. What is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

b. What will the stock price be in 3 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

c. What will the stock price be in 10 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Homework Answers

Answer #1
ans a)
we can use divided growth model to compute the share price
as per DDM
price of stock = Expected divided next year/(required rate - growth rate)
expected dividend next year = 1.2*104% 1.248
Price = =1.248/(10%-4%)
$   20.80
ans b) Price after 3 year = D4/(required rate - growth rate)
D4 = 1.2*(104%)^4 $     1.40
Price = =1.4/(10%-4%)
$   23.40
ans c) Price after 10 year = D11/(required rate - growth rate)
D11 = 1.2*(104%)^11 $     1.85
Price = =1.85/(10%-4%)
$   30.79
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.85 per share on its stock. The...
The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.85 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. Investors require a return of 12 percent on the company's stock.    What is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)   Current price $ What will the stock price be in three years? (Do not round intermediate...
The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.03 per share on its stock. The...
The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.03 per share on its stock. The dividends are expected to grow at a constant rate of 2.75 percent per year indefinitely. Investors require a return of 6.74 percent on the company's stock. What will the stock price be in 10 years?
The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.81 per share on its stock. The...
The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.81 per share on its stock. The dividends are expected to grow at a constant rate of 1.01 percent per year indefinitely. Investors require a return of 5.8 percent on the company's stock. What will the stock price be in 10 years?
1. The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.32 per share on its stock....
1. The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.32 per share on its stock. The dividends are expected to grow at a constant rate of 7 percent per year indefinitely. Required: (a) If investors require a 15 percent return on The Jackson-Timberlake Wardrobe Co. stock, what is the current price? what will the price be in 17years?
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.32 per share on its stock. The...
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.32 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely.    Required: (a) If investors require a 12 percent return on The Jackson-Timberlake Wardrobe Co. stock, what is the current price?   (Click to select)   $19.40   $18.86   $20.20   $7.76   $19.80    (b) What will the price be in 5 years?   (Click to select)   $24.07   $25.78   $24.76   $25.27   $9.91
1) The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.48 per share on its stock....
1) The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.48 per share on its stock. The dividends are expected to grow at a constant rate of 7 percent per year indefinitely. Required: (a) If investors require a 13 percent return on The Jackson-Timberlake Wardrobe Co. stock, what is the current price? (b) What will the price be in 8 years? 2) Antiques R Us is a mature manufacturing firm. The company just paid a $5 dividend, but management expects...
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.60 per share on its stock. The...
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.60 per share on its stock. The dividends are expected to grow at a constant rate of 6% per year indefinitely. (a)   If investors require a 12 percent return on its stock, what is the current price? (b) What will the price be in 15 years (at the same rate of return as above)? Please show steps for how to solve in Excel
The Herjavec Co. just paid a dividend of $1.35 per share on its stock. The dividends...
The Herjavec Co. just paid a dividend of $1.35 per share on its stock. The dividends are expected to grow at a constant rate of 3 percent per year indefinitely. Investors require a return of 10 percent on the company's stock. What is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current price           $   What will the stock price be in three years? (Do not round intermediate calculations...
The Nearside Co. just paid a dividend of $1.55 per share on its stock. The dividends...
The Nearside Co. just paid a dividend of $1.55 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year, indefinitely. Investors require a return of 14 percent on the stock.    a. What is the current price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the price be in three years? (Do not round intermediate calculations and round your answer...
The Timberlake-Jackson Wardrobe Co. has 11.2 percent coupon bonds on the market with eleven years left...
The Timberlake-Jackson Wardrobe Co. has 11.2 percent coupon bonds on the market with eleven years left to maturity. The bonds make annual payments and have a par value of $1,000.    If the bonds currently sell for $1,157.26, what is the YTM? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Yield to maturity             %
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT