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Stock Growth Rate and Dividends

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Grant Corporation's stock is selling for $40 in the market. The required rate of return on the company's stock is 13.8 percent. This year dividend is $2 (i.e., D0 = $2) and dividends are expected to grow at a constant rate. What is the growth rate for this stock?

A. 0.0552
B. 0.0838
C. 0.138
D. 0.088

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Solution Summary

This solution identifies the correct answer by calculating the growth rate for the stock in a stepwise manner.

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