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What is the constant growth rate that mastercard

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Reference no: EM132564723

Mastercard Inc.'s stock has a required return of 13% and the stock is currently priced at $50 per share. Mastercard just paid a dividend of $1.00, and they have announced that they plan to increase its dividend payment at a rate of 30% per year for the next 4 years. After Year 4, they expect the dividend growth rate to slow down from the 30% 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 4 (i.e., what is X)?

You must show all calculation steps, providing a final answer only will not get you full marks.

Reference no: EM132564723

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