The required return for Williamson Heating's stock is 12%, and the stock sells for $25 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 D₄ = $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?

Select the correct answer.

a. 2.98%

b. 0.46%

c. 2.75%

d. 2.29%

e. 2.52%