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Constant Growth Valuation
Woidtke Manufacturing's stock currently sells for $40 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 10% a year. What stock price is expected 1 year from now? Round your answer to the nearest cent.
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What is the estimated required rate of return on Woidtke's stock? Round the answer to three decimal places.
Which one of the following is false regarding investment decision-making criterion?
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