Question

LetItGO Corp. paid a dividend last quarter of $6.69. It is expected to grow at 2% over the next year, 7%, the following year, and 13% the year after that. After this period of non-constant growth, the dividends are expected to grow at a constant rate of 1% indefinitely. What is the dividend paid in year 1 after the first year of non-constant growth?

Answer 1

The dividend paid in year 1 after the non constant growth rate is $8.334

Step-by-step explanation:

Dividend = (D*(1+g))

Year Last (D) growth Dividend

1 $6.690 2% $6.824

2 $6.824 7% $7.301

3 $7.301 13% $8.251

Therefore, The dividend paid in year 1 after the non constant growth rate is $ 8.334($8.251*1.01)