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Modem Development, Inc. paid a dividend of $5.00 per share on its common stock yesterday. Dividends are expected to grow at a constant rate of 10% for the next two years, at which point the dividends will begin to grow at a constant rate indefinitely. If the stock is selling for $50 today and the required return is 15%, what it the ex¬pected annual dividend growth rate after year two?

a. 5.000%

b. 3.365%

c. 4.556%

d. 3.878%

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Basic Finance, Finance

Category:- Basic Finance
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