Delfino's expects to pay an annual dividend of $1.50 per share next year. what is the anticipated dividend for year 3 if the fir
1 answer:
The anticipated dividend for year 3 if the firm increases its dividend by 2 percent annually is $1.66.
<h3>What is meant by Dividend?</h3>
A corporation's payout of profits to its shareholders is known as a dividend. A corporation is able to distribute a portion of its profit as a dividend to shareholders when it generates a profit or surplus. Any remaining funds are withdrawn and reinvested back into the company. Dividend refers to a reward, cash or otherwise, that a firm delivers to its shareholders.
Dividends may be distributed in a number of ways, including stock dividends, cash payments, and other forms. The board of directors of a firm determines its dividend, which requires shareholder approval.
The future dividend can be computed as:
Future Dividend=Initial Dividend×
Here:
r stands the growth rate in dividend = 2% or 0.02
n exists the number of periods = 5
Initial Dividend = $1.50
The future dividend can be computed as:
Future Dividend=$1.50×(1+0.02)5
Future Dividend=$1.50×1.1041
Future Dividend=$1.66
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