ABC Co. earned $16 million for the fiscal year ending yesterday. The firm paid out 25% of its earnings as dividends yesterday. The firm will continue to pay out 25% of its earnings as annual, end of year dividends. Retained earnings = 75% for use in projects. The co. has $1.5 million of shares outstanding. The current stock price is $90. The historical return on equity of 13% is expected to continue in the future. What is the required rate of return on the stock?

Choose the best option

14.634%

11.579%

10.765%

12.498%