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# The Jackson-Timberlake Wardrobe Company just paid a dividend of \$1.95 per share on its stock. The dividends are expected to grow at a constant rate...

The Jackson-Timberlake Wardrobe Company just paid a dividend of \$1.95 per share on its stock. The dividends are expected to grow at a constant rate of 4% per year indefinitely. If investors require a return of 10.5% on The Jackson-Timberlake Wardrobe Company stock, what is the current price? What will the price in in 3 years? In 15 years?

Current price = 31.20 Price... View the full answer

• do you know how to do this in excel
• gpicon1064
• Apr 04, 2018 at 9:28pm
• Current price, you can input like this =(1.95*1.04)/(0.105-0.04)
• dinamarcanete
• Apr 04, 2018 at 9:38pm
• =(dividend x 1+ growth rate) / (rate - growth rate)
• dinamarcanete
• Apr 04, 2018 at 9:39pm
• For specific price in a year: =Current price*(1+growth rate)^n
• dinamarcanete
• Apr 04, 2018 at 9:40pm
• Example: in 3 years = =31.2*(1+0.04)^3
• dinamarcanete
• Apr 04, 2018 at 9:41pm

Current Price = D1/(ke-g) = \$1.95 x (1.04) 1 (0.105-0.04) = \$2.028/0.065 = \$31.20... View the full answer

• do you know how to do this in excel
• gpicon1064
• Apr 04, 2018 at 9:37pm
• yes, I actually worked on an excel to derive the answer. if you copy (1.95*((1.04)^16)) with an equal to sign, it will give you the result 3.652313. there is no provision on the site to attach an excel file
• payaljain3
• Apr 04, 2018 at 9:48pm
• likewise you can use all the above calculations and copy paste in excel after an equal to sign
• payaljain3
• Apr 04, 2018 at 9:50pm

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