Today Treetops Corp. stock sells for $50 and it expects to pay an upcoming dividend of $1.20 per share. The company has a policy of reinvesting 27% of its earnings. If investors expect a total return of 7.80%, what is the firm's return on equity?

a.20.00%

b.4.93%

c.7.40%

d.43.33%

e.28.89%

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The correct answer is: 20.00% How to solve this question?