Determining stock expected rate of return


Jersey common stock paid $2.50 in dividends last year (D0). Dividends are expected to grow at a 10% annual rate forever. If Jersey's current market price is $50, what is the stock's expected rate of return?

a. 12.3%

b. 15.5%

c. 13.76%

d. 22%

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Finance Basics: Determining stock expected rate of return
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