QUESTION 17

The required return for Williamson Heating's stock is 10%, and the stock sells for $50 per share. The firm just paid a dividend of $1.00, and the dividend is expected to grow by 30% per year for the next 4 years, so D ₄ = $1.00(1.30) ⁴ = $2.8561. 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?

	a.	5.17%
	b.	6.44%
	c.	5.32%
	d.	6.02%
	e.	5.72%