What is the expected annual divivdend growth rate

Reference no: EM13299380

Modern Development, Inc. paid a dividend of $5.00 per share on its common stock yesterday. Divivdends are expected to grow at a constant rate of 10% for the next two years, at which point the dividends will begin to grow at a constant rate indefinintely. If the stock is selling for $50 today and the required return is 15, what is the expected annual divivdend growth rate after year two?

a. 5.000%
b. 3.365%
c. 4.556%
d. 3.878%

Reference no: EM13299380

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