What growth rate cause common stock price remain unchanged


XYZ stock is currently paying a dividend of $2.00 per share (D0 = $2) and is in equilibrium. The company has a growth rate of 5% and beta equal to 1.5. The required rate of return on the market is 15%, and the risk-free rate is 7%. XYZ is considering a change in policy that will increase its beta coefficient to 1.75. If market conditions remain unchanged, what new growth rate will cause the common stock price of XYZ to remain unchanged?

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Finance Basics: What growth rate cause common stock price remain unchanged
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