Lee Hong Imports paid a $2.00 per share annual dividend yesterday. Dividends are expected to increase...

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Lee Hong Imports paid a $2.00 per share annual dividend yesterday. Dividends are expected to increase...

Lee Hong Imports paid a $2.00 per share annual dividend yesterday. Dividends are expected to increase by 5% annually. What is the expected dividend in year 3 ( 3 years from now)?

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Answer 1

Answer #1

This question requires application of basic time value of money function, according to which EV PV (1 where FV is Future Valu

Div3 = Div0 * (1 + g)³

Div3 = $2 * (1 + 5%)³

Div3 = $2 * 1.157625

Div3 = $2.32

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Answer 2

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Lee Hong Imports paid a $2.00 per share annual dividend yesterday. Dividends are expected to increase...