The current annual sales of Flower Bud, Inc. are $178,000. Sales are expected to increase by 4% next year (year 1) and 6% for the year after next year (year 2). The company has a net profit margin of 5% and dividend payout of 35% which are expected to remain constant for the next couple of years. There are 10,000 shares of common stock outstanding. The P/E of this firm is 16 times. What would be the IRR if this stock is bought at current price of $14 and sold after two year? Assume investors required return of 9%?

a.22.21%

b.12.63%

c. 8.21%

7.09%