1 2 Thress Industries just paid a dividend of 150 a share ie

1.)

2.)

Thress Industries just paid a dividend of $1.50 a share (i.e., D0 $1 50). The dividend is expected to grow 5% a year for the next 3 years and then 10% a year thereafter. What is the expected dividend per share for each of the next 5 years?

3.)

Solution

2.

2.

Current Dividend = $1.50

Growth rate in dividend in next 3 year is 5% and 10% after 3 year.

Dividend in year 1 = $1.50 × (1 + 5%)

= $1.575.

Dividend in year 1 will be $1.575.

Dividend in year 2 = $1.575 × (1 + 5%)

= $1.65375.

Dividend in year 2 will be $1.65.

Dividend in year 3 = $1.65375 × (1 + 5%)

= $1.74.

Dividend in year 3 will be $1.74.

Dividend in year 4 = $1.74 × (1 + 10%)

= $1.91.

Dividend in year 4 will be $1.91.

Dividend in year 5 = $1.91 × (1 + 10%)

= $2.10.

Dividend in year 5 will be $2.10.