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?

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Business

Mattie Lang

22 October, 10:06

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?

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Vasquez · Answer 1

The current stock price is $42.40 according to the information on the question above. This problem can be solved using the current stock price formula which stated as P=D1 / (r-g) where P is the current stock price, D1 is the future dividend per share, r is the investor's rate of return, and g is the dividend's growth rate. Calculation: 42.4 = (1.6 * (1+6%)) / (10%-6%)