Woidtke Manufacturing's stock currently sells for $29 a share. The stock just paid a dividend of $2.60 a share (i.e., D0 = $2.60
2 answers:
What stock price is expected 1 year from now? $ 37.1
What is the estimated required rate of return on Woidtke's stock? 15.50%
<h3>Explanation: </h3>A stock market is where investors meet to buy and sell shares. Stocks are an equity investment represented the part ownership in the corporation and entitles you to part of that corporation's earnings and assets
A dividend is the payment by a corporation to its shareholders, as a distribution of profits. A shareholder is individual or institution legally owns one or more shares of stock in corporation.
Stock price or share price is the price of a single share of a number of saleable stocks of a company, derivative or other financial asset.
Woidtke Manufacturing's stock currently sells for $29 a share. The stock just paid a dividend of $2.60 a share (i.e., D0 = $2.60), and the dividend is expected to grow forever at a constant rate of 6% a year.
(a) What stock price is expected 1 year from now? Do not round intermediate calculations.
$ 37.1
(b) What is the estimated required rate of return on Woidtke's stock? Round your answer to the nearest cent.
%
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Answer: $750,000
Explanation:
Given that,
Fixed price contract = $10,000,000
Cost incurred in the first year = $3,000,000
Remaining costs to complete = $5,000,000
Tullis billed = $4,000,000 in year 1
Collected by the end of the year = $3,500,000
Percentage of work completed =
=
= 37.5%
Revenue recognized = 37.5% of $10,000,000
= $3,750,000
Income recognized = Revenue recognized - Cost incurred in the first year
= $3,750,000 - $3,000,000
= $750,000