What is the equilibrium expected growth rate

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Gay Manufacturing is expected to pay a dividend of $1.25 per share at the end of the year (D1 = $1.25). The stock sells for $32.50 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. 6.01% b. 6.17% c. 6.33% d. 6.49% e. 6.65%

Reference no: EM13918356

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