Mulroney Motors' stock has a required return of 10% and its stock trades at $50 per share. The year-end dividend, D ₁ , is expected to be $1.00 per share. After this payment, the dividend is expected to grow by 25% per year for the next three years. That is, D ₄ = $1.00(1.25) ³ = $1.953125. After t = 4, the dividend is expected to grow at a constant rate of X% per year forever. What is the stock's expected constant growth rate after t = 4? In other words, what is X?

a. 5.47%

b. 6.87%

c. 6.98%

d. 8.00%

e. 8.27%

Answer rating: 100% (QA)

Dividend Discounted with different growth rate method need to be apply for this Market Price D ... View the full answer