The Common Stock of Eddie's Engines,Inc

question 46

Multiple Choice

The common stock of Eddie's Engines,Inc. sells for $20 a share. The stock is expected to pay $2 per share next month when the annual dividend is distributed. Eddie's has established a pattern of increasing its dividends by 4% annually and expects to continue doing so. What is the market rate of return on this stock?

• A) 14%
• B) 14.4%
• C) 15%
• D) 17%
• E) 19%

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