Biltmore Industries has grown at an average of 6% per year over its long history. Its stock

Question:

Biltmore Industries has grown at an average of 6% per year over its long history. Its stock price is currently $40.00, and its most recent dividend was $2.50. Biltmore just announced that it plans to discontinue dividends for several years to take advantage of some growth opportunities. Analysts expect the stock price to increase by 10% per year for at least the next two years because of this growth. Elmer Bartlett owns 4,000 shares of Biltmore and has counted on their dividend payments to supplement his retirement income. Now it appears that he will have to start selling off his Biltmore stock to replace this lost income. How many shares of stock will Elmer have to sell in each of the Next two years to replace his lost dividend income? Ignore taxes and transaction costs.


Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: