Part 2- Question 4

c) A share is going to pay its first dividend of $1.60 in one year. The value of the share today is $30 for investors who require a rate of return of 10% p.a. Assume the annual dividends will grow at a constant rate. Using the dividend discount model (DDM), calculate the constant annual growth rate. (Round your answer to the nearest 0.01%) (2 marks)