What is the constant growth rate

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Mastercard Inc.'s stock has a required return of 10% and the stock is currently priced at $100 per share. Mastercard just paid a dividend of $1.5, and they have announced that they plan to increase its dividend payment at a rate of 40% per year for the next 3 years. After Year 3, they expect the dividend growth rate to slow down from the 40% to a more modest constant growth rate of X% per year going forward forever. What is the constant growth rate that Mastercard is expecting after Year 3 (i.e., what is X)?

Reference no: EM132819980

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