Final answer:
The expected rate of return can be calculated using the formula: Expected rate of return = (Dividends + Capital appreciation) / Initial investment. Given the values provided, the expected rate of return for the stock is 22%.
Step-by-step explanation:
To calculate the expected rate of return of a stock, we can use the formula for the expected return which takes into account the current price of the stock, the expected dividend, and the growth rate of the dividend. However, as none of the provided information aligns with this calculation scenario, I will provide a general formula and explain using the given information as an example for educational purposes.
The expected rate of return can be calculated using the formula:
Expected rate of return = (Dividends + Capital appreciation) / Initial investment.
Given that the initial investment (P0) is $30, the expected dividend (D1) is $3.00, and the expected growth rate (g) is 12%, we can calculate the expected rate of return as follows:
Expected rate of return = ($3.00 + ($30 * 12%)) / $30.
Expected rate of return = ($3.00 + $3.60) / $30.
Expected rate of return = $6.60 / $30.
Expected rate of return = 0.22 or 22%.