Question

Sugar Cookies will pay an annual dividend of $1.23 a share next year. The firm expects to increase this dividend by 8 percent per year the following four years and then decrease the dividend growth to 2 percent annually thereafter. Which one of the following is the correct computation of the dividend for Year 7?A. ($1.23) ×(1.08)4×(1.02)2B. ($1.23) ×(1.08 ×4) ×(1.02 ×2)C. ($1.23) ×(1.08 ×4) ×(1.02 ×3)D. ($1.23)× (1.08)4×(1.02)4E. ($1.23) ×(1.08)4×(1.02)3

Answer 1

A. ($1.23) × (1.08)4 × (1.02)2 Is the equation used to show the dividend Sugar Cookies expects for Year 7.

A dividend is the amount of money that is paid during a specific time period by a company to their shareholders. The money is paid to their shareholders out of the profits for the quarter (usually).