Shane purchased a stock this morning at a cost of $13 a share.He expects to receive an annual dividend of $0.27 a share next year.What will the price of the stock have to be one year from today if Shane is to earn a 8 percent rate of return on this investment?
A) $12.38
B) $12.60
C) $12.88
D) $13.77
E) $14.28

Question

Quizplus · Accepted Answer

0.08 = (P₁ - $13 + $0.27)/$13; P₁ = $13.77

Shane Purchased a Stock This Morning at a Cost of $13