Kingbird Natural Foods' current dividend is $7.00. You expect the growth rate to be 0 percent...

Kingbird Natural Foods' current dividend is $7.00. You expect the growth rate to be 0 percent for years 1 to 5, and 1 percent for years 6 to infinity. The required rate of return on this firm’s equity is 11 percent.

Determine the expected dividend at the end of year 5. (Enter answer to 2 decimal places)

Expert Solution

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

D5=7*(1.0)^5

=$7

jeff jeffy answered 2 years ago

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