What is the correct answer?

A stock just announced that its next annual dividend will be $1.02 and it expects to increase that dividend by 2.5 percent annually. The stock is currently selling for $28 a share. How do you compute the expected rate of return? Click the answer you think is right. i = [($1.02 x 1.025)/$28] + 0.025 i = ($1.02/$28) - 0.025 i = ($1.02/$28) + 0.025 i = ($1.02 X 1.025)/$28