Final answer:
The expected dividend per share at the end of year 5 for Ottocell Motor Company is $1.98, which is obtained by progressively applying the given growth rates to the initial dividend. Therefore, the correct option is C.
Step-by-step explanation:
To calculate the expected dividend per share at the end of year 5 for Ottocell Motor Company, we need to apply the different growth rates to the current dividend and then use the constant rate. The dividend began at $1.40 and is expected to grow at a rate of 10% next year, making it $1.54 ($1.40 * 1.10). In the second and third years, it grows by 8%, so at the end of year 2, it will be $1.66 ($1.54 * 1.08), and at the end of year 3, it will reach $1.79 ($1.66 * 1.08). Thereafter, it will grow at a constant rate of 5%.
The calculation for the year 4 dividend is $1.88 ($1.79 * 1.05), and for year 5, it is $1.98 ($1.88 * 1.05). Hence, the expected dividend per share at the end of year 5 is $1.98.