Question

Atlas Mines has adopted a policy of increasing the annual dividend on its common stock at a constant rate of 2.75 percent annually. The firm just paid an annual dividend of $1.67. What will the dividend be six years from now

Answer 1

1.9652

Step-by-step explanation:

Data provided in the question

Annual dividend at constant rate = 2.75%

Annual dividend = $1.67

So by considering the above information, the dividend be six years from now is

= Annual dividend × (1 + growth rate)^number of years

= $1.67 × (1 + 2.75%)^6

= $1.67 × 1.1767

= 1.9652

We simply apply the above formula so that the dividend after six year could come