Question $1(1$ point$)$

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Use the dividend growth model to determine the required rate of return for equity. Your investment bankers have determined that the stack should be offered at a price of $$90\mathrm{.}00$ per share and that you should anticipate paying a dividend of $$3\mathrm{.}50$ at the end of the first year. If you anticipate a constant growth in dividends of $5\mathrm{.}00\%$ per year and the investment banking firm will take $8\mathrm{.}00\%$ per share as flotation costs, what is the required rate of return for this issue of new common stock?

$9\mathrm{.}35\%$

$9\mathrm{.}08\%$

$9\mathrm{.}88\%$

$9\mathrm{.}83\%$

$9\mathrm{.}23\%$