ABC Corporation just paid dividend of S10 a shure

Finance Jan 24, 2021

ABC Corporation just paid dividend of S10 a shure. Dividend is expected to grow at a constant rate g=5%. What is the expected dividend at the end of 5 years? fround your answer to the nearest hundredth, have two digits after decimal place.) Ansur

Expert Solution

Current dividend = $10

Growth rate = 5%

Year 1 Dividend

= 10*5% + 10

= $10.50

Year 2

= 10.50*5% + 10.50

= $11.03

Year 3

= $11.03*5% + 11.03

= $11.58

Year 4

= $11.58*5% + 11.58

= $12.16

Year 5

= $12.16*5% + 12.16

= $12.77

Total Dividend

= $10.50 + 11.03 + 11.58 + 12.16 + 12.77

= $58.04

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