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Holtzman Clothiers's stock currently sells for $18 a share. It just paid a dividend of $3.5 a share (i.e., D0 = $3.5). The dividend is expected to grow at a constant rate of 6% a year. What stock price is expected 1 year from now? Round your answer to two decimal places.

Respuesta :

Answer:

Stock Price After 1 year = $19.08

Explanation:

The question is to determine the stock Price for one year for Holtzman Clothier

First we decide what the formula is  as follows

Stock Price after 1 year = The Current Price of Stock x ( 1 + Growth Rate)

The Current Stock Price = $18 a share

The Grwoth Rate = 6% a year

Based, on these given figures, we plug them into the formula as follows

Stock Price After 1 year = $18 x (1 + 6%)

Stock Price After 1 year = $18 x (1.06)

Stock Price After 1 year = $19.08

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