The risk-free rate is 4%; the market risk premium is 8%. LDC Companys stock has a beta of 1.5. The last dividend was $4, and the dividend growth rate (g) is expected to be a constant of 10%. The stocks current market price (P0) is $70.

If you buy the stock now, what is the expected rate of return for the first year? Assume that the stock price will reach the equilibrium level at t=1 if it is currently mispriced.

Select one: a. 24.75% b. 18.43% c. 15.87% d. 21.53%