Retained earnings don't pay interest or dividends, but investors still expect to earn a return on the earnings that the firm reinvests on their behalf. Use the following information to estimate an investors required rate of return.

Risk free rate =	3.00%	Beta =	1.050
Market rate =	11.00%	Todays price =	$20.00
Growth =	6.00%	Anticipated dividend =	$1.50
Borrowing rate =	7.50%	Tax rate =	25.00%

Select one:

a.

11.40%

b.

11.15%

c.

11.55%

d.

14.55%