Question

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 firm increases its dividend by 2 percent annually?

Answer 1

The anticipated dividend for year 3 if the firm increases its dividend by 2 percent annually is $1.66.

What is meant by Dividend?

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 Any remaining funds are withdrawn and reinvested back into the company.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×$(1+r)^{n}$

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

To learn more about Dividend refer to:

brainly.com/question/2960815

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