Homework SoursePike Corporation just paid a dividend of 180 a share that is
Pike Corporation just paid a dividend of $1.80 a share (that is, D0 = $1.80). The dividend is expected to grow 11 percent a year for the next 3 years and then at 3 percent a year thereafter. What is D5, the expected dividend per share for Year 5?
| Pike Corporation just paid a dividend of $1.80 a share (that is, D0 = $1.80). The dividend is expected to grow 11 percent a year for the next 3 years and then at 3 percent a year thereafter. What is D5, the expected dividend per share for Year 5? |
| I know the answer is $2.61, but I dont know how to solve it. May I know step by step? |
Solution
the expected dividend per share for Year 5 = 1.80*1.11^3 * 1.03^2
the expected dividend per share for Year 5 = 2.61
