Answer:
b. 5.23%
Explanation:
The computation of the dividend growth rate is shown below:
As we know that
Value of stock = Current year dividend ÷ (Required rate of return - growth rate)
$82 = $4.65 ÷ (0.109 growth rate)
$8.938 - 82 × growth rate = $4.65
82 × growth rate = 4.288
growth rate = 4.288 ÷ 82
= 5.23%
Hence, the dividend growth rate is 5.23%
Therefore the correct option is b.
