Answer: 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%
