(Q. 11 IN B) WHAT IS THE EXPECTED CONSTANT GROWTH RATE OF DIVIDEND...
16. (Q. 11 in B) What is the expected constant growth rate of dividends for a
stock currently priced at $50, that just paid a dividend of $4, and has a required
rate of return of 18 percent?
A) 3.41 percent
B) 5.50 percent
C) 9.26 percent
D) 12.50 percent
Answer C
$50 = $4(1 + g)/(0.18 – g), so r = 9.26%.