Find the required rate of return on shares

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Hot Co had earnings in the last period of $4 per share. Earnings are growing at a constant rate of 6%, and expected to continue growth at that rate. Management of Hot Co, estimates that the required rate of return on their shares is 10%. They would like to target a trading price for their shares at $20/sh. The dividend payout ratio that most closely meets their objective is:

-50%

-60%

-70%

-80%

-None of the above

Reference no: EM133111239

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