The next expected dividend (D1) for Goode Inc.'s stock is calculated using the Gordon Growth Model and is found to be $4.94.
The student's question pertains to finding the next expected dividend (D1) for Goode Inc.'s stock, given the required rate of return, stock price, and dividend growth rate. To calculate D1, we use the Gordon Growth Model (also known as the Dividend Discount Model), which is represented by the formula: P0 = D1 / (r - g), where P0 is the current stock price, D1 is the next expected dividend, r is the required rate of return, and g is the growth rate.
By rearranging the formula to solve for D1: D1 = P0 * (r - g), and substituting in the values provided (P0 = $95, r = 0.117, g = 0.065), we get:
D1 = $95 * (0.117 - 0.065) = $95 * 0.052 = $4.94
Therefore, the next expected dividend, D1, for Goode Inc.'s stock is $4.94.