Determine what is this constant growth rate

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Reference no: EM132019598

Suppose a stock just paid a dividend of $1.50 per share. The dividend per share is expected to grow at a rate of 18 percent next year and 20% the following year.

Beyond year 2, the dividend will grow at a constant rate, g. Given that the current stock price is $60 per share and the appropriate discount rate is 10 percent, what is this constant growth rate?

Reference no: EM132019598

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