Home inal Exam Chapters 71114 16 Back to Assignment Deadli

Home inal Exam - Chapters 7-11,14, 16 | Back to Assignment Deadline Today at 09:00 PM 14. GLC Corporation just paid a dividend of $1.60 a share (ie.DO-$1.60A2A).The dividend is expected to grow 9% a year for the next 3 years and then at 5% a year thereafter. what is the expected dividend per share for tinh year CDs? A. $2.14 O B. $1.96 C. $2.04 D.$2.28 Continze without saving Copyright NoticesTerms of Use Privacy NoticeSecurity Notice Accessibility

Solution

Here. Do = $1.6 growth rate = 9% for three years

There fore D3 = Do (1+ g)³

Then D3 = 1.6(1+0.09)³ = 2.072

Then g after 3 year is 5%

So D5 = D3(1+g)²

= 2.072 ( 1+0.05)² = 2.28$

Therefore the correct answer is (d)