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Woidtke: Required Rate of Return on the Company's Stock

Woidtke Manufacturing's stock currently sells for $20 a share. The stock just paid a dividend of $1.00 a share (i.e, D0 = $1.00). The dividend is expected to grow at a constant rate of 10% a year. What stock price is expected 1 year from now? What is the required rate of return on the company's stock?

Solution Summary

The solution comprises of 5 lines of calculations to find the required rate of return.

$2.19