DPS CALCULATION Weston Corporation just paid a dividend of 3

DPS CALCULATION Weston Corporation just paid a dividend of $3 a share (i.e., Do-$3). The dividend is expected to grow 8% a year for the next 3 years and then at 5% a year thereafter, what is the expected dividend per share for each of the next 5 years? Round your answers to two decimal places D1 = D4=

Solution

Solution: D1=$3.24 D2=$3.50 D3=$3.78 D4=$3.97 D5=$4.17 Working Notes: D1 = D0 x (1+g) = $3 x (1+0.08) =$3.24 D2 = D1 x (1+g) = $3.24 x (1+0.08) =$3.4992 = $3.50 D3 = D2 x (1+g) = $3.4992 x (1+0.08) =$3.779136 = $3.78 D4 = D3 x (1+g) = $3.779136 x (1+0.05) =$3.9680928 = $3.97 D5 = D4 x (1+g) = $3.9680928 x (1+0.05) =$4.166497 = $4.17 Please feel free to ask if anything about above solution in comment section of the question.