Problemwoidtke manufacturings stock currently sells for 23, Ask an Expert

Accounting

Problem:

Woidtke Manufacturing's stock currently sells for $23 a share. The stock just paid a dividend of $3.00 a share (i.e., D0 = $3.00), and the dividend is expected to grow forever at a constant rate of 8% a year.

Required:

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

Question 2: What is the estimated required rate of return on Woidtke's stock?

Note: Provide support for your rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91166138

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