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4 April, 09:20

LetItGO Corp. paid a dividend last quarter of $6.69. It is expected to grow at 2% over the next year, 7%, the following year, and 13% the year after that. After this period of non-constant growth, the dividends are expected to grow at a constant rate of 1% indefinitely. What is the dividend paid in year 1 after the first year of non-constant growth?

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  1. 4 April, 12:11
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    The dividend paid in year 1 after the non constant growth rate is $8.334

    Explanation:

    Dividend = (D * (1+g))

    Year Last (D) growth Dividend

    1 $6.690 2% $6.824

    2 $6.824 7% $7.301

    3 $7.301 13% $8.251

    Therefore, The dividend paid in year 1 after the non constant growth rate is $ 8.334 ($8.251*1.01)
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