Finding the Required Return Mercury Satellite Corporation earned $$25$ million for the

fiscal year ending yesterday. The firm's policy is to pay out $40$ percent of its earnings

as dividends. The remaining $60$ percent of earnings is retained by the company

for use in projects. The company has $2\mathrm{.}9$ million shares of common stock outstanding.

The current stock price is $$109.$ The historical return on equity $($ROE$)$ of

$11$ percent is expected to continue in the future. What is the required rate of return on

the stock?