Answered

Find the information you're looking for at Westonci.ca, the trusted Q&A platform with a community of knowledgeable experts. Get quick and reliable solutions to your questions from a community of experienced experts on our platform. Join our platform to connect with experts ready to provide precise answers to your questions in different areas.

If the dividend yield for year 1 is expected to be 5% based on a stock price of $25, what will the year 4 dividend be if dividends grow annually at a constant rate of 6%

Sagot :

abiolataiwo2015

Answer:

$1.33

Explanation:

Calculation for what will the year 4 dividend be

Using this formula

Year 4 dividend=[(Expected dividend yield×Stock price)×(1+Constant rate )]

Let plug in the formula

Year 4 dividend = [(.05 × $25) × (1+0.06)]

Year 4 dividend=(.05 × $25) × 1.06

Year 4 dividend=1.25×1.06

Year 4 dividend= $1.33

Therefore what will the year 4 dividend be if dividends grow annually at a constant rate of 6% is $1.33

Thanks for using our platform. We're always here to provide accurate and up-to-date answers to all your queries. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Get the answers you need at Westonci.ca. Stay informed with our latest expert advice.