Ask Question
BusinessBusiness
23 January, 10:57

Dunkin' Brands just paid an annual dividend of $1.10 a share. The firm expects to increase this dividend by 8 percent per year the following three years and then decrease the dividend growth to 2 percent annually thereafter. Which one of the following is the correct computation of the dividend for year 7? A. (S1.10) (1.08 x 3) (1.02 4) B. (S1.10) (1.08 3) (1.02 x 3) C. (S1. 10) (1.08) (1.02) D. (SI. 10) (1.08) (102) E. (S1.10) (1.08) (1.02)

+3
Answers (1)
  1. 23 January, 13:50
    0
    Dividend in year 7 will be calculated as follows:

    D3 = Do (1+g) n = 1.10 (1+0.08) 3

    D7 = Do (1+g) n (1+g) n = 1.10 (1.08) 3 (1+0.02) 4 = $1.4999

    Explanation:

    In the first instance, we need to calculate dividend in 3 year's time based on current dividend paid at 8% growth rate. Thereafter, we also need to calculate dividend from from year 4 to year 7 (4 years) based on the new growth rate of 2%. The combination of these growth regimes gives the dividend in year 7.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Dunkin' Brands just paid an annual dividend of $1.10 a share. The firm expects to increase this dividend by 8 percent per year the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Suppose your uncle offers you $100 today or $150 in 10 years. you would prefer to take the $100 today if the interest rate is
Answers (1)
Wiley's has total equity of $679,400, long-term debt of $316,900, net working capital of $31,600, and total assets of $1,123,900. What is the total debt ratio?
Answers (1)
Langley Company reported net income for 2022 in the amount of $460,000. The company's financial statements also included the following: Increase in accounts receivable$77,000 Decrease in inventory 62,000 Increase in accounts payable 250,000
Answers (1)
Ridge township's governing body adopted its general fund budget for the year ended july 31, year 1, composed of estimated revenues of $100,000 and appropriations of $80,000, ridge formally integrates its budget into the accounting records.
Answers (2)
Consider Noah's decision to go to college. If he goes to college, he will spend $80,000 on tuition, $15,000 on room and board, and $4,000 on books.
Answers (2)
New Questions in Business
Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce ei ther 2 units of corn or 6 units of wheat per year. Each nation has 10 workers.
Answers (1)
How can business taxes positively affect an economy? A If taxes are low, more businesses can be created. B If taxes are low, then businesses will give more of their earnings away.
Answers (1)
Assume Joe Harry sells his 25% interest in Joe's S Corp., Inc. to Tyrone on January 29. Using the daily allocation method, how much income does Joe Harry report if Joe's S Corp., Inc.
Answers (1)
Whirlwind Financial Corporation sends its executives to a resort in Mexico-at taxpayer's expense-to consider using the firm's cash to buy back its stock and thereby prop up the value. Many of its competitors are doing the same thing.
Answers (1)
LO 7.2Rehydrator makes a nutrition additive and expects to sell 3,000 units in January, 2,000 in February, 2,500 in March, 2,700 in April, and 2,900 in May.
Answers (1)
Home » Business » Dunkin' Brands just paid an annual dividend of $1.10 a share. The firm expects to increase this dividend by 8 percent per year the following three years and then decrease the dividend growth to 2 percent annually thereafter.
Sign Up Forgot Password?