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Required rate of return of harrison clothiers


Problem:

Harrison Clothiers' stock currently sells for $35 a share. It just paid a dividend of $3 a share (that is, D0 = 3). The dividend is expected to grow at a constant rate of 10% a year.

Required:

Question 1: What stock price is expected 1 year from now?

Question 2: What is the required rate of return?

Note: Provide support for rationale.

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Accounting Basics: Required rate of return of harrison clothiers
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