Find out the required rate of return on the stock, Finance Basics

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Find out the required rate of return on the stock

Problem:

A firm is expected to pay $2 dividend per share in year 1 (D1=$2) and the dividend is expected to grow at a constant rate of 5%.

Required:

Question: If the firm's stock price is $28.64 based on the constant growth model, what is the required rate of return on the stock?

Note: Please show basic calculation

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Finance Basics: Find out the required rate of return on the stock

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Finance Basics: Find out the required rate of return on the stock

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