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2 September, 07:48

If the current dividend (D0) is $3.00 and the growth rate is 6%. How much will the dividend be at Time 5?

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  1. 2 September, 10:37
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    The dividend will be $4.015

    Explanation:

    The given data is: Initial dividend given is = $3 and growth rate given is = 6%

    the following formula is used in order to calculate the dividend

    dividend at time 5 = d0 multiply with (1+growth rate) power 5

    = $3.00 multiply with (1+0.06) power 5

    =>$3.00 multiply (1.33822558)

    =>$4.015 (rounded to two decimals).

    Note : The dividend is the amount that is paid by the company to its shareholders. The amount of dividend may vary from year to year depending upon the profitability level of the company that it earned during the year.
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