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The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.40 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. Required:(a) If investors require a 11 percent return on The Jackson-Timberlake Wardrobe Co. stock, what is the current price

Sagot :

abiolataiwo2015

Answer:

$24.5

Explanation:

Calculation for What is the current stock price

Current stock price=$1.40 (1+.05) / (.11-.05)

Current stock price=$1.40 (1.05) / (.11-.05)

Current stock price=$1.47/0.06

Current stock price=$24.5

Therefore the current stock is $24.5

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