Question: Company ABC just announced that it will increase its dividend from $3.50 to $4.20 per share. Prior to the announcement, ABC's dividends were expected

Company ABC just announced that it will increase its dividend from $3.50

Company ABC just announced that it will increase its dividend from $3.50 to $4.20 per share. Prior to the announcement, ABC's dividends were expected to grow at 5% per year into perpetuity, and its share price was $50. If the share price remained the same after the announcement, what is the expected growth rate of dividends after the announcement? Assume that the debt level and cash remain the same. a) 3.60% b) 4.20% c) 8.00% d) 12.00% e) Not enough information ill not be an exam, but the concept will

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