Androscoggin Copper can grow at 5% per year for the indefinite future. It's selling at $100, and next year's dividend is $5. What is the expected rate of return from investing in Carrabasset Mining common stock? Carrabasset and Androscoggin shares are equally risky.

10%

Explanation:

The computation of the expected rate of return is shown below:

Expected rate of return = (Next year dividend : selling price) + growth rate per year

= (5 : $100) + 5%

= 5% + 5%

= 10%

By considering all the elements that are given in the question i. e growth rate, selling price, and the next year dividend we can find out the expected rate of return i. e shown above