# Growth Rate of Dividends (Constant Rate)

Grant Corporation's stock is selling for $40 in the market. The company's beta is 0.8, the market risk premium is 6 percent, and the risk-free rate is 9 percent. The previous dividend was $2 (i.e., D0 = $2) and dividends are expected to grow at a constant rate.

What is the growth rate for this stock?

https://brainmass.com/business/accounting-for-corporations/growth-rate-dividends-constant-rate-60040

#### Solution Preview

The growth rate can be found by using the dividend discount model. The dividend discount model says that

Market Price = Expected Dividend ...

#### Solution Summary

The solution explains the calculation of the growth rate in dividends using the constant growth model.

$2.19