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What is the constant growth rate

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Reference no: EM132804582

Mastercard Inc.'s stock has a required return of 8% and the stock is currently priced at $125 per share. Mastercard just paid a dividend of $2.00, and they have announced that they plan to increase its dividend payment at a rate of 20% per year for the next 4 years. After Year 4, they expect the dividend growth rate to slow down from the 20% 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)?

Reference no: EM132804582

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