The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.40 per share on its stock. The dividends are expected to grow at a constant rate of 7 percent per year indefinitely.
Required:
(a) If investors require a 15 percent return on The Jackson-Timberlake Wardrobe Co. stock, what is the current price?
A. $18.35
B. $18.72
C. $19.10
D. $6.36
E. $17.50?
(b) What will the price be in 9 years?
A. $35.11
B. $11.70
C. $32.17
D. $33.74
E. $34.43