Franklin Corporation is expected to pay a dividend of $1.25 per share at the end of the year (D₁ = $1.25). The stock sells for $56.00 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?

Select the correct answer.

a. 7.23%

b. 8.01%

c. 7.75%

d. 8.27%

e. 7.49%