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Constant Growth Valuation
Woidtke Manufacturing's stock currently sells for $37 a share. The stock just paid a dividend of $1.75 a share (i.e., D0 = $1.75), and the dividend is expected to grow forever at a constant rate of 4% a year. What stock price is expected 1 year from now? Round your answer to the nearest cent.
$
What is the estimated required rate of return on Woidtke's stock? Do not round intermediate calculations. Round the answer to three decimal places.
%
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If we solve the dividend growth model presented in the text for total return, we find that total return is comprised of
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