Last year, the Brown Bike Co

Finance Jan 19, 2021

Last year, the Brown Bike Co. paid an annual dividend of $1.80 per share. The company has a dividend policy which calls for constant dividends. The sales of the firm are increasing by 2 percent each year. What is the anticipated dividend for year 4?

Expert Solution

The dividend of the company will be constant in nature because it is reflecting that the company is having a Dividend policy which will be reflecting constant dividend and constant dividend means that the dividend will be constant and there will be no growth in the dividend, and it will be paid irrespective of the profit or the loss to the company, so that dividend which has been paid in current year will be paid in all the years until and unless the policy of company is changed.

THE ANTICIPATED DIVIDEND FOR THE YEAR 4 IS $ 1.80.

Correct answer is $ 1.80.

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