Savickas Petroleum's Stock Has a Required Return of 12

question 10

Multiple Choice

Savickas Petroleum's stock has a required return of 12.00%,and the stock sells for $44.00 per share.The firm just paid a dividend of $1.00,and the dividend is expected to grow by 30.00% per year for the next 4 years,so D₄ = $1.00(1.30) ⁴ = $2.8561.After t = 4,the dividend is expected to grow at a constant rate of X% per year forever.What is the stock's expected constant growth rate after t = 4,i.e. ,what is X? Do not round your intermediate calculations.

• A) 6.91%
• B) 8.01%
• C) 7.05%
• D) 5.60%
• E) 5.73%