Harrison Clothiers' stock currently sells for $18 a share. It just paid a dividend of $4 a share (that is, D0 = 4). The...
Harrison Clothiers' stock currently sells for $18 a share. It just paid a dividend of $4 a share (that is, D0 = 4). The dividend is expected to grow at a constant rate of 9% a year.
- What stock price is expected 1 year from now? Round your answer
to two decimal places.
$ - What is the required rate of return? Round your answers to two decimal places.
Homework Answers
Using Constant Growth Model,
Required Rate of Return= 4(1.09)/18 + 0.09
Required Rate of Return = 33.22%
Stock Price in Year 1 = 4(1.09)2/(0.3322 - 0.09)
Stock Price in Year 1 = $19.62
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