DT Motors paid its first annual dividend yesterday in the amount of $4.75 a share. The...
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 30 percent per year for the next 4 years. Thereafter, the dividend is expected to grow at 3 percent per year indefinitely. What is the amount of the dividend that is expected to be paid thirteen years from now (D13)? A. $11.79 B. $17.70 C. $15.46 D. $21.34
Homework Answers
We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
D13=$4.75*(1.3)^4*(1.03)^9
=4.75*3.72656269
=$17.70(APPROX).
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