The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.15 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. Investors require a return of 10.5 percent on the company's stock. 2.7 points a. What is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the stock price be in 3 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What will the stock price be in 15 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) eBook Hint Print References b. Current price Stock price in 3 years Stock price in 15 years


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D1= D0(1+G)n

D1= 2.15(1+0.04)1

D1= 2.236

D4= 2.15(1+0.04)4

D4= 2.515195904

D16= 2.15(1+0.04)16

D16= 4.02690967816

Answer A)

Stock Price today

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*

= $ 34.4

Answer B)

Stock Price in 3 years

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*

= $ 38.69

Answer C)

Stock Price in 16 years

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*

= $ 61.95

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