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Integrated Potato Chips paid a $1 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4% per year. a. What is the expected dividend in each of the next 3 years

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Kolawole845

Answer:

The expected dividend in year 3 = $1.12

Explanation:

The expected dividend is the dividend payable at a certain date in the future. To determine the value, we multiply the dividend at a certain time by the expected growth rate.

Year       Workings       Expected dividend

1            1 × 1.04           = 1.04

2           1.04 × 1.04     =   1.08

3           1.08 × 1.04     = 1.12

The expected dividend in year 3 = $1.12

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