Problem:
Johnson Corporation's stock is currently selling at $45.83 per share. The last dividend paid (D0) was $2.50. Johnson is a constant growth firm.
Required:
Question: If investors require a return of 16% on Johnson's stock, what do they think Johnson's growth rate will be?
a.) 7%
b.) 6%
c.) 9%
d.) 10%
e.) 8%
Note: Please show how you came up with the solution.