Dividend is expected to grow at constant rate

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Reference no: EM131354581

Holtzman vs. Farley Inc.

Holtzman Clothiers' stock currently sells for $27 a share. It just paid a dividend of $1.25 a share (i.e., D0 = $1.25). The dividend is expected to grow at a constant rate of 9% a year.

a. What stock price is expected 1 year from now? Round your answer to two decimal places.

$ ______

b. What is the required rate of return? Round your answers to two decimal places. Do not round your intermediate calculations.

% ________

c. Farley Inc. has perpetual preferred stock outstanding that sells for $38.00 a share and pays a dividend of $4.00 at the end of each year. What is the required rate of return? Round your answer to two decimal places. _______

Reference no: EM131354581

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