River Co. just paid a dividend of $2 per share out of earnings of $4 per share. If its book value per share is $25 and its stock is currently selling for $40 per share, calculate the required rate of return on the stock.
A) 15.2 percent
B) 7.2 percent
C) 14.7 percent
D) 13.4 percent
Correct Answer:
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