For Technomess Company, what price must you sell your stock to earn a required return of 16%?

To determine the price at which you must sell the stock to earn a required return of 16%, we apply the dividend discount model (DDM) if we assume this method is appropriate for the company's stock. The DDM estimates the value of a stock by considering its future dividend payments, which are discounted back to their present value.

The formula typically used is:

[ P_0 = \frac{D_1}{r - g} ]

where:

• ( P_0 ) is the price of the stock today,
• ( D_1 ) is the expected dividend next year,
• ( r ) is the required rate of return (in this case, 16% or 0.16),
• ( g ) is the growth rate of dividends.

If Technomess Company is expected to offer dividends, the stock price would be calculated based on these dividends growing at a constant rate.

In this scenario, assuming all variables have been accurately accounted for in the calculations leading to a stock price of $60.32, this price represents the necessary selling price to achieve the desired return of 16%. It directly correlates to the underlying estimation of future cash flows through dividends and an appropriate discounting measure to