Question

Assume a company pays out $100 in dividends in year 1. dividends increase by 10% a year for 4 years and thereafter stay constant. what is the total amount of dividends paid out (rounded to the nearest $1) during years 1-10?

Answer 1

Dividends increased by 10% (0.1) in the first 4 years.
Therefore

Dividends paid in year 1 = $100.00
Dividends paid in year 2 = $100*1.1 = $110.00
Diividends paid in year 3 = $110*1.1 = $121.00
Dividends paid in year 4 = $121*1.1 = $133.10
Dividends paid in year 5 = $133.1*1.1 = $146.41

For the next years 5 - 10, dividends remained constant.
Dividends paid in years 6 - 10 = $146.41*5 = $732.05

Total dividends paid in years 1-10 is
100 + 110 + 121 + 133.10 + 146.41 + 732.05 = $1,342.56

Answer: Total dividends paid in years 1-10 = $1,343 (nearest dollar)