Last year, A1 Bank paid an annual dividend of $7 per share. The bank expects the growth of its dividends to be stable at 2% per year going forward.
If the stock currently trades at $124.55 per share, what is the dividend growth rate investors expect?
Hint: When the constant-growth formula is solved for the growth variable, it becomes
g=-D/P+r
The answer is 2.27%, please provide an Excel formula that produces this result.
