The stock of nogro corporation is currently selling for $40 per share. earnings per share in the coming year are expected to be $6. the company has a policy of paying out 40% of its earnings each year in dividends. the rest is retained and invested in projects that earn a 15% rate of return per year. this situation is expected to continue indefinitely.

a. assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth ddm, what rate of return do nogro’s investors require? (do not round intermediate calculations.)