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Mulcrook Motors stock gas a required return of 10 percent. The stock currently trades at 50 dollars per share. The year end dividend, Dividend One,
Mulcrook Motors stock gas a required return of 10 percent. The stock currently trades at 50 dollars per share. The year end dividend, Dividend One, is expected to be 1.00$ per share. After this payment, the dividend is expected to grow by 25 percent per year for the next three years. That is D4 = 1.00(1.25^3) = 1.953125. After t=4, the dividend is expected to grow at a constant rate of X percent per year forever. What is the stocks expected constant growth rate at t=4? In other words, what is X?
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