Find what is the constant growth rate that will be applied

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Problem 1: You are not sure what the growth rate is for a question on the midterm. The question states that the dividend payout rate is 70%. The investments made with retained earnings at the company will return 9%. The discount rate it 5%. What is the constant growth rate that will be applied if these rates stay consistent overtime?

Option 1: 6.3%
Option 2: 1.5%
Option 3: 2.7%

Reference no: EM133009531

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