Question

Investors expect the following series of dividends from a particular common stock:
Year 1 ...... $1.10
Year 2 ......$1.25
Year 3 ......$1.45
Year 4 ......$1.60
Year 5 ......$1.75
After the fifth year, dividends will grow at a constant rate. If the required rate of return on this stock is 9 % and the current market price is $45.64, what is the long-term rate of dividend growth expected by the market?


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  • CreatedMarch 26, 2015
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