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Goldman Sachs has just received an offer to manage an additional equity offering for Revion Inc. Goldman Sachs considers Revlon a highly valued account and

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Goldman Sachs has just received an offer to manage an additional equity offering for Revion Inc. Goldman Sachs considers Revlon a highly valued account and wants to quote a competitive rate for them. After a meeting with Revlon's Executive VP and CFO, the Revlon account manager gathers the following information: Revlon has just paid a dividend of $1.15; the current stock price is $23; the growth rate of dividends is estimated as 8%. Given this info and the size of the issue, Goldman Sachs quotes a rate of 10% to Revlon Putnam Investments (an institutional investor and a valuable client of Goldman Sachs) gets interested in this issue and wants to know the rate of return that they can expect from the Revlon issue. What should be the response from the Revlon account manager? O 13.00% O 10.00% 5.00% 13,40% O cannot be determined, need more information

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