The correct answer is B. 11.23%.
The formula for calculating the expected growth rate is:
Expected growth rate = (D1 / P0) – 1
Where:
- D1 = Expected dividend per share in the next year
- P0 = Current stock price per share
In this case, we have:
- D1 = Rs 20
- P0 = Rs 65
Therefore, the expected growth rate is:
Expected growth rate = (20 / 65) – 1 = 11.23%
Option A is incorrect because it is the dividend yield, not the expected growth rate. The dividend yield is calculated by dividing the expected dividend per share by the current stock price per share. In this case, the dividend yield is:
Dividend yield = (20 / 65) = 30.77%
Option C is incorrect because it is the number of times the expected dividend per share is greater than the current stock price per share. This is not the same as the expected growth rate.
Option D is incorrect because it is the expected dividend per share. This is not the same as the expected growth rate.