The company just paid its annual dividend of $4.75. You believe the dividend will grow constantly at 9.1% per year. Todays P/E ratio is 9.1 and the payout ratio is 70%. You assess the stocks intrinsic value with a 17.0% discount rate. Find the one-year rate of return from buying today @ the market price and holding it one year, receiving next years dividend and selling, given that next years share price converges to its price according to the dividend growth model. Hint: P₀ is based on P/E and P₁ is based on dividend growth model

Select one:

a. 20.31%

b. 25.98%

c. 24.29%

d. 18.49%

e. 16.57%