USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
As an economist for a research firm, you are forecasting the market P/E ratio using the dividend discount model. Because the economy has been slow for 5 years, you expect the dividend-payout ratio to be 55 percent. Long-term government bond rates are at 6 percent, and the equity risk premium is estimated to be 3 percent. Return on equity (ROE) is estimated to be 11 percent.
-Refer to Exhibit 9.8. What is the expected growth rate?

A) 3.00 percent
B) 3.92 percent
C) 4.95 percent
D) 5.27 percent
E) 6.05 percent