Garth Manufacturing is expected to pay a dividend of 1.25 per share at the end of the year (D1 = $1.25). The stock sells for $21.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?
a. 4.87%
b. 4.73%
c. 5.34%
d. 5.48%
e. 4.69%