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Question Workspace Check My Work (3 remaining) eBook Carnes Cosmetics Co.'s stock price is $57, and...

Question Workspace Check My Work (3 remaining) eBook Carnes Cosmetics Co.'s stock price is $57, and it recently paid a $1.50 dividend. This dividend is expected to grow by 25% for the next 3 years, then grow forever at a constant rate, g; and rs = 13%. At what constant rate is the stock expected to grow after Year 3?

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Answer #1

The constant rate, g is 8.71%.

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