If the dividend yield for year 1 is expected to be a 7% based on a stock price of 30 what will the year 5 divident be if dividents grow annually at a constant rate of 8%?

Respuesta :

Answer:

$3.09

Explanation:

dividend in 5 years = dividend x ( + growth rate)^5

dividend yield =  dividend / price

0.07 = dividend / 30

dividend = 30 x 0.07 = 2.1

2.1 x (1.08)^5 = 3.09

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