Martin's Mills common stock is currently selling for $70.00 per share. The company just paid a $1.80 dividend and plans to pay $1.82 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return on this stock

we are given the stock price of $70.00 per share then we also given the dividends for this year for $1.80 and its expected to be $1.82 net year so we ill be using this formula to calculate the required rate of return:

Required rate of Return = (expected dividend payment/current stock price) + dividend growth rate

so firstly we will get the dividend growth rate which is calculated as follows,

(expected dividend - current dividend)/current dividend

($1.82-$1.80)/$1.80

then we are given the current stock price therefore we will substitute on the above mentioned formula

Required rate of return = ($1.82/$70.00) + ($0.02/$1.80)

=0.037111111111111 then we multiply by 100

=3.71% correct to two decimal paces.