Question
Woidtke Manufacturing's stock currently sells for $32 a share. The stock just paid a dividend of $2.25 a share (i.e., D0 = $2.25), and the
Woidtke Manufacturing's stock currently sells for $32 a share. The stock just paid a dividend of $2.25 a share (i.e., D0 = $2.25), and the dividend is expected to grow forever at a constant rate of 5% a year.
What stock price is expected 1 year from now?
What is the estimated required rate of return on Woidtke's stock? Round the answer to three decimal places. %
AND Question 2
What is the required rate of return on a preferred stock with a $50 par value, a stated dividend of 7% of par, and a current market price of (a) $59, (b) $78, (c) $96, and (d) $139 (assume the market is in equilibrium with the required return equal to the expected return)? Round the answers to two decimal places.
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