Estimating the current and expected stock price
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The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.60 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. Investors require a return of 10 percent on the company's stock.
What is the current stock price?
What will the stock price be in three years?
What will the stock price be in 12 years?
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The solution depicts the steps to estimate the current and expected price of given stock.
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What is the current stock price?
Current dividend=Do=$1.60
Growth rate=g=6%
Expected dividend at the end of year 1=D1=Do*(1+g)=1.60*(1+6%)=$1.696
Required rate of ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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