Renew It, Inc., is preparing to pay its first dividend. It is going to pay $0.45,...

Renew It, Inc., is preparing to pay its first dividend. It is going to pay $0.45, $0.60, and $1 a share over the next three years, respectively. After that, the company has stated that the annual dividend will be $1.25 per share indefinitely. What is this stock worth to you per share if you demand a 10.8 percent rate of return on stocks of this type?

Expert Solution

stock worth = 0.45/1.108 + $0.60/1.108^2 + 1/1.108^3 + (1.25/10.8%)/1.108^3= $10.14

ekkarill92 answered 2 years ago

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