Calculate the required return.
Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $2.90 next year. The growth rate in dividends for all three companies is 5 percent. The required return for each company's stock is 8.80 percent, 11.90 percent, and 14.40 percent, respectively.
Dividend Paid = $1.89
Dividend Growth Rate = 5%
Stock Price = $38.00