Riverhawk Sport Authority (RSA) will pay a dividend of $7 for each of the next 3 years, $8 for each of the years 4-6, $9 for each of the years 7-9, and a dividend of $10 for year 10

Finance Oct 26, 2020

Riverhawk Sport Authority (RSA) will pay a dividend of $7 for each of the next 3 years, $8 for each of the years 4-6, $9 for each of the years 7-9, and a dividend of $10 for year 10. Thereafter, the company will pay no dividends. If you require 13 percent rate of return on investments in this risk class, how much is this stock worth to you?

A. $44.66

B. $39.35

C. $37.80

D. $42.77

E. $46.68

F. $41.00

Expert Solution

so, the correct option is D "$42.77".

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