Question

If Minnesota Health Systems, just paid a dividend of $2.92 and

if investors expect a 15% constant dividend growth rate, the
dividend expected in five years will be?

Answer 1

To find the expected dividend of Minnesota Health Systems in five years with a 15% growth rate, use the formula D1 = D0 * (1+g)^t. Inserting the values provided, we get D1 = $2.92 * (1 + 0.15)^5.

Step-by-step explanation:

The student's question involves calculating the future dividend of Minnesota Health Systems given a constant dividend growth rate. This type of question falls under the subject of finance, which is a subset of business studies.

To calculate the expected dividend in five years, the dividend growth formula can be used: D1 = D0 * (1 + g)^t, where D1 is the dividend in future years, D0 is the current dividend, g is the growth rate, and t is the number of years. In this case, we have been provided with D0 ($2.92), the growth rate (15%), and t (5 years).

Using the formula we can calculate the expected dividend in five years: D1 = $2.92 * (1 + 0.15)^5. This calculation yields the estimated future dividend Minnesota Health Systems will pay to its investors after five years.