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Montana Motors' stock has a required return of 13%, and the stock sells for $50 per share. The year-end dividend, D1, is expected to be $2.00 per share. After this payment, the dividend is expected to grow by 30% per year for the next 3 years, so D4 = $2.00(1.30)3 = $4.3940. 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, i.e., what is X?

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Category:- Basic Finance
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