The Jackson-Timberlake Wardrobe Company just paid a dividend of $1.38 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely.**a.** If investors require a return of 11 percent on the company's stock, what is the current price?- **Current price:** $24.15**b.** What will the price be in 6 years?- **Stock price in 6 years:** $32.36

Dividend = $1.38Growth rate = 5%Required rate = 11%a. Calculation of current stock price:b. Calculation of stock price in 6 years:The current stock price = $24.15.Stock price in 6 years = $32.36.

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The Jackson-Timberlake Wardrobe Company just paid a dividend of $1.38 per share its stock. The dividends are expected to grow at a constant rate of 5 percent per y indefinitely. a. If investors require a return of 11 percent on the company's stock, what is the curren price? Current price $24.15

The Jackson-Timberlake Wardrobe Company just paid a dividend of $1.38 per share its stock. The dividends are expected to grow at a constant rate of 5 percent per y indefinitely. a. If investors require a return of 11 percent on the company's stock, what is the curren price? Current price $24.15

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

The Jackson-Timberlake Wardrobe Company just paid a dividend of $1.38 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely.

**a.** If investors require a return of 11 percent on the company's stock, what is the current price?

- **Current price:** $24.15

**b.** What will the price be in 6 years?

- **Stock price in 6 years:** $32.36

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