The required return for the stock will be 10.7% that is option D is correct.
Dividend may be defined as the cash or profits, or rewards earned by the shareholders and given by the company or organization. It is given only when the parent company is able to earn surplus profit and then shares it proportionally between its shareholders. According to question
The next dividend payment by Savitz incorporation is $2.35 per share and the growth rate is 6% that is 0.06.
Now, the stock is currently being sold at $50 per share
Therefore, the required return can be calculated as by the formula
R = [(D₁/Po) + g], where R is return, D₁ is the cost per share, Po is the current cost per share and g is the growth rate.
R = ($2.35/$50) + 0.06
R = 0.047 + 0.06
R = 0.107
R = 10.7% which is the required return.
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