Shane purchased a stock this morning at a cost of $13 a share.He expects to receive an annual dividend of $.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

.08 = (P₁ - $13 + $.27)/$13; P₁ = $13.77

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