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LetItGO Corp. paid a dividend last quarter of $6.69. It is expected to grow at 2% over the next year, 7%, the following year, and 13% the year after that. After this period of non-constant growth, the dividends are expected to grow at a constant rate of 1% indefinitely. What is the dividend paid in year 1 after the first year of non-constant growth?

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Karabo99

Answer:

The dividend paid in year 1 after the non constant growth rate is $8.334

Explanation:

Dividend = (D*(1+g))

Year Last (D)         growth  Dividend

1         $6.690           2%          $6.824

2         $6.824           7%          $7.301

3         $7.301           13%  $8.251

Therefore, The dividend paid in year 1 after the non constant growth rate is $ 8.334($8.251*1.01)

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