Assume a dividend today of $2.50 with anticipated growth over the next three years of 10%. The estimated dividend at the third year is:

A) $3.25.
B) $3.28.
C) $3.33.
D) None of the above

Question

Assume a dividend today of $2.50 with anticipated growth over the next three years of 10%. The estimated dividend at the third year is:A) $3.25.B) $3.28.C) $3.33.D) None of the above

angelita nelson · Accepted Answer

Final Answer : C, Explanation :  Using the formula for calculating future dividends, we have:Year 1 dividend = $2.50 x (1 + 0.10) = $2.75Year 2 dividend = $2.75 x (1 + 0.10) = $3.025Year 3 dividend = $3.025 x (1 + 0.10) = $3.3275Rounding to the nearest cent, the estimated dividend at the third year is $3.33, which corresponds to choice C.

Assume a dividend today of $2.50 with anticipated growth over the next three years of 10%. The estimated dividend at the third year is:

A) $3.25.
B) $3.28.
C) $3.33.
D) None of the above

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