Answer:
$17.37
Explanation:
Rosita's made an announcement that the next annual dividend payment will be $1.65 per share
The dividend will increase by 2.5% annually
= 2.5/100
= 0.025
The rate of return is 12%
= 12/100
= 0.12
Therefore, the maximum amount that should be paid to purchase this stock can be calculated as follows
Po= $1.65/(0.12-0.025)
= $1.65/0.095
= $17.37
Hence the maximum amount that should be paid to purchase a share of the stock is $17.37
