A company just paid a dividend to its common shareholders of $7.50 per share, so DIV₀ = $7.50. A newly introduced product line is expected to increase dividends by 75% for the next (or upcoming) year followed by 40% during the year after next. Based on these forecasted dividend growth rates, what will be the values of dividends for each of the next two years (that is, find DIV₁ and DIV₂)?

 

a. Expected dividend at the end of Year 1 (DIV₁) =

 b. Expected dividend at the end of Year 2 (DIV₂) =

Answer rating: 100% (QA)

Heres how to calculate the expected dividends for the next two years ... View the full answer