HomeworkLib
Question

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.

  1. What stock price is expected 1 year from now? Round your answer to two decimal places.
    $   
  2. What is the required rate of return? Round your answers to two decimal places.
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

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

0 0
Add a comment
Know the answer?
Add Answer to:
Harrison Clothiers' stock currently sells for $18 a share. It just paid a dividend of $4 a share (that is, D0 = 4). The...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Harrison Clothiers' stock currently sells for $39 a share. It just paid a dividend of $2.25...

    Harrison Clothiers' stock currently sells for $39 a share. It just paid a dividend of $2.25 a share (that is, D0 = 2.25). The dividend is expected to grow at a constant rate of 5% a year. a. What stock price is expected 1 year from now? Round your answer to two decimal places. $ b. What is the required rate of return? Round your answers to two decimal places. % Ezzell Corporation issued perpetual preferred stock with a 9%...

  • Holtzman Clothiers' stock currently sells for $15 a share. It just paid a dividend of $2.5...

    Holtzman Clothiers' stock currently sells for $15 a share. It just paid a dividend of $2.5 a share (i.e., D0 = $2.5). The dividend is expected to grow at a constant rate of 4% 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. Do not round your intermediate calculations. %

  • 10. Harrison Clothiers' stock currently sells for $20.00 a share. It just paid a dividend of...

    10. Harrison Clothiers' stock currently sells for $20.00 a share. It just paid a dividend of $1.00 a share (that is, Do = $1.00). The dividend is expected to grow at a constant rate of 6% a year. What stock price is expected 1 year from now? What is the required rate of return?

  • Problem 9-3 Constant growth valuation Harrison Clothiers' stock currently sells for $34 a share. It just...

    Problem 9-3 Constant growth valuation Harrison Clothiers' stock currently sells for $34 a share. It just paid a dividend of $2.5 a share (that is, Do = 2.5). The dividend is expected to grow at a constant rate of 7% a year. a. What stock price is expected 1 year from now? Round your answer to two decimal places. b. What is the required rate of return? Round your answers to two decimal places.

  • Constant growth valuation Holtzman Clothiers' stock currently sells for $37 a share. It just paid a...

    Constant growth valuation Holtzman Clothiers' stock currently sells for $37 a share. It just paid a dividend of $3.75 a share (i.e., D0 = $3.75). The dividend is expected to grow at a constant rate of 6% 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. Do not round your intermediate calculations. %

  • Holtzman Clothiers's stock currently sells for $30 a share. It just paid a dividend of $4...

    Holtzman Clothiers's stock currently sells for $30 a share. It just paid a dividend of $4 a share (i.e., D0 = $4). The dividend is expected to grow at a constant rate of 3% 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 answer to two decimal places. Do not round your intermediate calculations. %

  • Holtzman Clothiers's stock currently sells for $33.00 a share. It just paid a dividend of $3.00 a share (i.e., D0 = $3.0...

    Holtzman Clothiers's stock currently sells for $33.00 a share. It just paid a dividend of $3.00 a share (i.e., D0 = $3.00). 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 the nearest cent. $   What is the required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.   %

  • 9. Harrison Clothiers' stock currently sells for $20 ashare. It just paid a dividend of $1.00...

    9. Harrison Clothiers' stock currently sells for $20 ashare. It just paid a dividend of $1.00 a share (that isD0 = $1.00). The dividend is expected to grow at aconstant rate of 6 percent a year. What stock price isexpected 1 year from now? What is the required rate ofreturn? 10. A stock is expected to pay a dividend of $0.50 at the end of theyear (that is, D1 = 0.50), and it should continue togrow at a constant rate...

  • CONSTANT GROWTH VALUATION Holtzman Clothiers's stock currently sells for $18 a share. It just paid a...

    CONSTANT GROWTH VALUATION Holtzman Clothiers's stock currently sells for $18 a share. It just paid a dividend of $2 a share (i.e., D0 = $2). 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 answer to two decimal places. Do not round your intermediate calculations. %

  • Columbus Manufacturing's stock currently sells for $ 28.60 a share. The stock just paid a dividend...

    Columbus Manufacturing's stock currently sells for $ 28.60 a share. The stock just paid a dividend of $3.50 a share (i.e.,D0). The dividend is expected to grow at a constant rate of 4 % a year. What stock price is expected one year from now (P1)? Round your answer to two decimal places.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT