Salabary Inc. has just developed a new drink based on exotic non-alcoholic products requiring new investments to be financed by raising equity. In a vigorous marketing effort to introduce this new product, Salabary Inc. CEO Denethor announces that the firm expects to pay a low dividend of $ 0.50 per share at the end of next year. One year later, or in two years, a second dividend of $ 0.75 per share will be paid. Thereafter, the firm will have to pay a dividend of $ 1.50 at the end of the third year. From the start of the fourth year, dividends will have to increase at an annual rate of 6% until the foreseeable future . a) What price are you prepared to pay for a share of Salabary Inc. if you demand a 16% rate of return? Wowed by this new product, you buy Salabary Inc. stock at the price found in Immediately after your acquisition, Salabary Inc. blamed bad news from Health Canada that called into question the safety of the product1. Following this news, the expected growth rate has been revised downwards and will instead be in the order of 2% per year from the start of the fourth year, instead of 6% as expected .b) Calculate the rate of return you would achieve by selling the stock in 3 years