Investors expect the following series of dividends from a particular ordinary share:
Year 1 $1.10
Year 2 $1.25
Year 3 $1.45
Year 4 $1.60
Year 5 $1.75
After the fifth year, dividends will grow at a constant rate. If the required rate of return on this equity is 9% and the current market price is $45.64.
What is the long-term rate of dividend growth expected by the market?
The question belongs to Finance and it discusses about expected dividend growth by market in share valuation.
Total Word Count 25
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