CONSTANT GROWTH VALUATION Holtzman Clothiers's stock currently sells for $38.00 a share. It just paid a dividend of $2.00 a share (i.e., D, = $2.00). The dividend is expected to grow at a constant rate of 5% a year. What stock price is expected 1 year from now? What is the required rate of return?

Fundamentals of Financial Management (MindTap Course List)
14th Edition
ISBN:9781285867977
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter9: Stocks And Their Valuation
Section: Chapter Questions
Problem 16P: NONCONSTANT GROWTH Milts Cosmetics Co.s stock price is 58.88, and it recently paid a 2.00 dividend....
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9-3 CONSTANT GROWTH VALUATION Holtzman Clothiers's stock currently sells for $38.00 a
share. It just paid a dividend of $2.00 a share (i.e., D, = $2.00). The dividend is expected to
grow at a constant rate of 5% a year. What stock price is expected 1 year from now? What
is the required rate of return?
Transcribed Image Text:9-3 CONSTANT GROWTH VALUATION Holtzman Clothiers's stock currently sells for $38.00 a share. It just paid a dividend of $2.00 a share (i.e., D, = $2.00). The dividend is expected to grow at a constant rate of 5% a year. What stock price is expected 1 year from now? What is the required rate of return?
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