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G's Flowers pays an annual dividend that increases by 1.8 percent per year, commands a market rate of return of 13.8 percent, and sells for $19.08 a share. What is the expected amount of the next dividend

Respuesta :

Ritmeks

Answer:

$2.28

Explanation:

G's flower pay an annual dividend that increase by 1.8%

= 1.8/100

= 0.018

The market rate of return is 13.8%.

= 13.8/100

= 0.138

The price is $19.08 per share

Therefore the expected amount of the next dividend can be calculated as follows

= 19.08= D1/(0.138-0.018)

19.08= D1/0.12

D1= 0.12×19.08

D1= $2.28

Hence the expected amount for the next dividend is $2.28

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