An investor owns shares of XYZ stock that currently are worth $10,000. The stock is expected to generate dividends of 3.5% of its value each year, and to appreciate in value at an annual rate of 10%.

a. What is the investors expected pre-tax return on this investment?

b. Assuming the investor is subject to an ordinary income tax rate of 35% and a capital gains tax rate of 20%, what is the investors overall effective tax rate on this investment?

c. What is the investors expected after-tax percentage rate of return on this investment?