You Are Considering the Purchase of a Certain Stock

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.