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After paying a dividend of $1.90 last year, a company does not expect to pay a...

After paying a dividend of $1.90 last year, a company does not expect to pay a dividend for the next year. After that it plans to pay a dividend of 6.66 in year 2 and then increase the dividend at a rate of 4 percent per annum in years 3 to 6. What is the expected dividend to be paid in year 4? (to nearest cent; don't include $ sign)

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Expert Solution

D0=1.90
D1=0
D2=6.66
D3=6.66*1.04
Expected dividend to be paid in year 4 D4=6.66*1.04^2=7.20

jeff jeffy answered 2 years ago
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