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Brigham and Houston just paid a dividend of $1.00 a share. The dividend is expected to...

Brigham and Houston just paid a dividend of $1.00 a share. The dividend is expected to grow 30% a year for the next 3 years and then at a rate of 6% a year thereafter. What is the expected dividend per share for Year 1?

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Answer #1

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence  expected dividend per share for Year 1=$1*(1.3)

=$1.3

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