Gray Manufacturing is expected to pay a dividend of $1.25 per share at the end of the year (D 1 = $1.25). The stock sells for $22.50 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?

a. 4.30%

b. 4.94%

c. 4.90%

d. 4.25%

e. 5.88%