Problem:
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.70 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. Investors require a return of 15 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 20 years?
Note: Show supporting computations in good form.