An analyst determines that a company has a ROE of 16% and pays 40% of its earnings in dividends. If the firm last paid a $1.50 dividend and the stock is selling for $40.00, what is the required rate of return on the stock? A) 6.4% B) 9.6% C) 10.2% D) 13.7%

D1/P + g = rce =d0 * (1+g) / P + g g = ROE * RR = .16 * .6 = .096 so 1.5 * 1.096 / 40 + .096 = .1371 answeR D

your right its D