Super Computer Company's stock is selling for $100 per share today. It is expected that-at the end of one year-it will pay a dividend of $6 per share and then be sold for $114 per share. Calculate the expected rate of return for the shareholders.

The expected rate of return for the shareholders is 20%

Explanation:

The expected return per share = dividend to be received + premium on stock = $6 + ($114 - $100) = $20

So the expected rate on return for the shareholders = total expected return per share / price per share = $20/$100 = 20%