Answer:
13.4%
Explanation:
Stock price is $18.75
Dividend growth rate is 5%
Dividend is $1.50
Therefore the required return can be calculated as follows
r= (1.5×1+0.05)/18.75)+5/100
= 1.5 × 1.05/18.75 + 0.05
= 1.575/18.75 + 0.05
= 0.084 + 0.05
= 0.134×100
= 13.4%
