Ramble-On-Rose Florists Inc

Ramble-On-Rose Florists Inc.common shares are priced at $39.96 today and are expected to pay the next annual dividend of $1.85 in one year's time.Investors have historically required an 11% return for holding Ramble-On stock.Assume that the dividends grow at a constant rate in perpetuity,and calculate the growth rate implicit in today's stock price.Then,calculate the fair price for the stock after the $1.85 dividend in one year's time.Finally,calculate the capital gain rate.That is,the percentage change in the stock price between today and one year from now.

A) 4.63%, $30.39, 31.50%
B) 4.63%, $40.64, 5.38%
C) 6.37%, $39.96, 0.00%
D) 6.37%, $42.55, 6.37%
E) 6.37%, $42.55, 6.48%