Problem:
Woidtke Manufacturing's stock currently sells for $36 a share. The stock just paid a dividend of $3.75 a share (i.e., D0 = $3.75), and the dividend is expected to grow forever at a constant rate of 3% a year.
Answer the following question:
Question 1: What stock price is expected 1 year from now?
Question 2: What is the estimated required rate of return on Woidtke's stock?
Please provide all calculation.