Question

Click here to read the eBook: Constant Growth Stocks CONSTANT GROWTH VALUATION Holtzman Clothiers's stock currently sells for $36 a share. It just paid a dividend of $2 a share (i.e., Do = $2). The dividend is expected to grow at a constant rate of 5% a year. a. What stock price is expected 1 year from now? Round your answer to two decimal places. b. What is the required rate of return? Round your answer to two decimal places. Do not round your intermediate calcu lations. %

Answer 1

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ke - Microsoft Excel (Product Activation Failed) Add-Ins File Home Insert Page Layout Formulas Data Review View - 2x % Cut Dr General Wrap Text Merge & Center - $ % 88 AutoSum - A Fill- Sort & 2 Clear Filter Editing E Copy Paste Format Painter Clipboard HP17 - HO Find & Select Styles Calibri -11AA = = = BI U D A Font fx HP HQ Formatting as Table Styles Alignment Number Cells HR HS HT HU HV HW HX HY HOLTZMAN 7 9 P1 = PO*(1+3)= 36*(1+0.05) = 37.8 D1 = D0(1+g) = 2*(1+0.05) = 2.10 11 12 13 14 15 16 ke = ke = D1/PO + g = 2.10/36 + 0.05 = 10.83% 17 18 19 K convexity DGM betaport future INDEX INTL CAP BUDLEASING PV, FV, ANNUITY DIR right clean YIELD bond portfolio KE CAPM UTILITY, SHARPE, beta ferences: 218 cap stru WACC BOI 130% RESI el - O- Red DER 19 * ENG 27-10-2019