A stock will pay a dividend of $9 at the end of the year. It sells today for $101 and its dividends are expected grow at a rate of 10%. What is the implied rate of return on this stock

18.9%

Explanation:

From the question, we are informed that a stock will pay a dividend of $9 at the end of the year and that it sells today for $101 and its dividends are expected grow at a rate of 10%.

The implied rate of return on this stock will be:

= ( D1 / share price) + growth rate

= (9/101) + 10%

= 0.089 + 0.1

= 0.189

= 18.9%

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so, to answer your question 1.

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- courtney

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