Answer:
rate of return = 0.13722 = 13.72 %
so correct option is a. 13.72%
Step-by-step explanation:
given data
annual divident = $0.85
constant rate = 9.00%
stock currently trades = $18.00 per share
to find out
expected rate of return
solution
we know that expected rate of return is express as here
rate of return =
+ growth ........................1
so put here value we get
rate of return =
+ growth
rate of return =
+ 9%
rate of return = 0.047222 + 0.09
rate of return = 0.13722 = 13.72 %
so correct option is a. 13.72%