(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%.