The Common Stock of Eddie's Engines Corp

Multiple Choice

The common stock of Eddie's Engines Corp. sells for $25.71 a share. The stock is expected to pay $1.80 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) 7%
B) 9%
C) 11%
D) 13%
E) 15%