Question

just paid an annual dividend of $3.00 per share last year. Management just announced that future dividends will increase by 2 percent annually. What is the amount of the expected dividend in year 5 g

Answer 1

Answer: $3.31

Explanation:

Dividends will increase by 2% so using a future value formula would show the amount of dividends in year 5.

= 3 * ( 1 + 2%)⁵

= 3 * 1.1040808032‬

= ‭3.3122424096‬

= $3.31