Expected annual rate of return on the stock investment

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Reference no: EM131603628

A stock you are buying today promises no dividends for a long time. In exactly 11 years you expect the stock will pay its first annual dividend of $1.60 . At that time, you also believe that the stock could be sold for $31.00 . If today you can buy the stock for $9.84, what is the expected annual rate of return on the stock investment?

a. 10.5%

b. 11.5%

c. 8.6%

d. 7.9%

e. 9.5%

Please show working out

Reference no: EM131603628

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