Find the internal rate of return (IRR) of buying a $120 stock now that's expected to pay annual dividends forever, with the next $16 dividend to be paid in one year (t=1). The dividend is expected to grow forever at -4% per annum (note the negative sign). Therefore the second dividend (paid at t=2) is expected to be $15.36 (=(16*(1+-0.04)^1). The IRR of buying this stock now is:

Select one:

a.

-8% pa

b.

1.333334% pa

c.

8.6016% pa

d.

8.96% pa

e.

9.333333% pa

THIS IS ALL THE INFORMATION GIVEN