What is the expected annual rate of return

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Mims Enterprises is a rapidly growing producer of high-end logo-wear for ACC schools. The company currently pays a dividend (D0) of $1 per share. This dividend is expected to grow at 10 percent per year for the next 3 years. The growth rate is expected to decline to 8 percent per year for years 4 through 7, and at 6 percent per years for years 8 through 14. The current price of Mims' stock is $20 per share. A consensus of security analysts expects the stock price to increase to $30 by the end of year five.

What is the expected annual rate of return on this stock to a buyer of the stock today?

Reference no: EM132789431

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