Answer :
(a) Current stock price = D1 / Required return - Growth rate
= 2.236 / 0.105 - 0.04
= $ 34.40
D1 = D0 (1+g ) = 2.15 ( 1.04 ) = 2.236
(b) Stock price in 3 years = Current price ( 1 + g ) n
= $ 34.40 (1 + 0.04 ) 3
= $ 38.70 ( Apprx)
(c) Stock price in 15 years
= Current price ( 1 + g
= $ 34.40 (1 + 0.04 ) 15
= $ 61.95
S08-01 Stock Values (L01) The Jackson-Timberlake Wardrobe Co.just paid a dividend of $2.15 per share on...
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