Woidtke Manufacturing's stock currently sells for $22 a share. The stock just paid a dividend of $1.20 a share (i.e., D0 $1 20), 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?
What is the estimated required rate of return on Woidtke's stock?
(Assume the market is in equilibrium with the required return equal to the expected return.)