You Are Considering the Purchase of a Certain Stock

question 15

Multiple Choice

You are considering the purchase of a certain stock. You expect to own the stock for the next four years. The current market price of the stock is $24.50 and you expect to sell it for $55 in four years. You also expect the stock to pay an annual dividend of $1.25 at the end of year 1,$1.35 at the end of year 2,$1.45 at the end of year 3 and $1.55 at the end of year 4. What is your expected return from this investment?

• A)21.78 percent
• B)18.36 percent
• C)26.68 percent
• D)32.85 percent
• E)None of these choices are correct.