e. 7.59 percent $1.90 $38.25= ; R = .07467 = 7.47 percent R-.025 AACSB TOPIC: ANALYTIC SECTION: 8.1 TOPIC: REQUIRED RETURN TYPE: PROBLEMS Dy *66. The current yield on Martin's Mills common stock is 3.6 percent. The company just paid a $1.80 dividend and plans to pay $1.86 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return on this stock? a. 3.72 percent b. 4.08 percent c. 5.69 percent d. 6.93 percent E. 7.05 percent Dys Di Po gs 1.86-1.8 $0.03 0.036 x 1.86 Rs P Po = 51.67 S 1.8 1.86 51.67 +0.03 $1.80 .036= ; Po = $50.00; g = D $1.86-$1.80 $1.80 $1.86 = .033333; $50.00 = ; R = R-.033333