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MMLU / A company last paid a dividend of …

Problem

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question

A company last paid a dividend of $3. If the expected return on its equity is estimated at 12% and its shares are currently quoted on London Stock Exchange at $75, what should the dividend growth rate be to ensure that the price is consistent with the pricing of a growing perpetuity?
Plain-text mathematical notation (without MathML)
A company last paid a dividend of $3. If the expected return on its equity is estimated at 12% and its shares are currently quoted on London Stock Exchange at $75, what should the dividend growth rate be to ensure that the price is consistent with the pricing of a growing perpetuity?
Original LaTeX notation
A company last paid a dividend of $3. If the expected return on its equity is estimated at 12% and its shares are currently quoted on London Stock Exchange at $75, what should the dividend growth rate be to ensure that the price is consistent with the pricing of a growing perpetuity?

choices

  1. 0%
  2. 8%
  3. 16%
  4. -4%

subject

professional_accounting

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