The price of the investors can expect the stock to be sold at the end of the year is $109.
The price of the investors can expect the stock to be sold at the end of the year can be determined using this formula:
Stock price = d1 / (r - g)
d1 = next dividend to be paid = $9
r = cost of equity
g = dividend growth rate
The cost of equity would be determined using the capital asset pricing model:
Risk free rate + beta(market rate of return - risk free rate)
8% + 1(18% - 8%) = 18%
The dividend growth rate can be determined using this equation:
100 = $9 / ( 18% - g)
g = 9%
Stock price = $9(1 + 0.9) / (0.18 - 0.09)
9.81 / 0.09 = $109
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