Problem:
Harrison Clothiers' stock currently sells for $23 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 7% a year.
Required:
Question 1: What stock price is expected 1 year from now?
Question 2: What is the required rate of return?
Note: Please show how to work it out.