Calculate the Expected Dividend in 6 Years
What is the expected dividend to be in 6 years?
If burler corp. pays an annual dividend on its common stock that is expected to grow by 4.47 percent per year forever, the next dividend is due in 1 year, and the next dividend is expected to be $2.76, then what is the dividend expected to be in 6 years?
Expected Dividend in 6 Years
The dividend expected to be in 6 years will be $3.62.
In order to calculate the expected dividend in 6 years, we can use the formula:
Dn = D0(1 + g)n
Where:
D0 = $2.76
g = 4.47% or 0.0447
n = 6 years
Plugging the values into the formula, we get:
D6 = $2.76(1 + 0.0447)6
D6 = $2.76(1.0447)6
D6 = $2.76 x 1.3107
D6 = $3.6182
Therefore, the expected dividend to be in 6 years will be $3.62 (rounded to the 100th decimal).