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Woidtke Manufacturing's stock currently sells for $26 a share. The stock just paid a dividend of...

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Finance

Woidtke Manufacturing's stock currently sells for $26 a share.The stock just paid a dividend of $2.75 a share (i.e., D0 = $2.75),and the dividend is expected to grow forever at a constant rate of9% a year. What stock price is expected 1 year from now? Round youranswer to the nearest cent. What is the estimated required rate ofreturn on Woidtke's stock? Do not round intermediate calculations.Round the answer to three decimal places. (Assume the market is inequilibrium with the required return equal to the expectedreturn.)

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Solution Calculation of estimated required rate of return on Woidtkes stock As per the Gordon growth Model price of a share is calculated using the following formula P0 D0 1 g ke g Where P0 Current Price of the share D0 Dividend paid in Year 0 ie Recent    See Answer
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