Problem:
The Jackson Timberlake Wardrobe Co. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a constant rate of 3 percent per year indefinitely. Investors require a return of 11 percent on the company's stock.
Required:
Question 1: What is the current stock price?
Question 2: What will the stock price be in three years?
Question 3: What will the stock price be in 6 years?
Note: Provide support for your rationale.