Question

DT Motors paid its first annual dividend yesterday in the amount of $4.75 a share. The company plans to increase the dividend at a rate of 20 percent per year for the next 3 years. Thereafter, the dividend is expected to grow at 3.50 percent per year indefinitely. What is the amount of the dividend that is expected to be paid 11 years from now (D11 )

Answer 1

$9.52

Step-by-step explanation:

Calculation for the amount of the dividend that is expected to be paid 11 years from now (D11 )

D11 = 4.75(1.20)3(1.035)8

D11= $9.52

Therefore the amount of the dividend that is expected to be paid 11 years from now (D11 ) is $9.52