4. The Pioneer Corporation currently paid a $2.50 per share dividend on its common stock.  Dividends are expected to grow forever at 3%, and investors require a 10% rate of return.  Pioneer's management is planning to enter new, risky markets and thinks that the investors' required rate of return will increase to 13% in response to the increased risk.  What does the new expected dividend growth rate have to be for the plan to be a good decision?

Answer rating: 100% (QA)

To determine the new expected dividend growth rate required for the plan to be a good decision we ca... View the full answer