Texas Teas dividend policy calls for the dividend to be increased each year by the same rate.

Question:

Texas Tea’s dividend policy calls for the dividend to be increased each year by the same rate. Last year, the company paid a dividend equal to $2.50 per share. This year, after the company initiates a 5-for-1 stock split, Texas Tea expects to pay a dividend equal to $0.54 per share. At what rate does Texas Tea increase its dividend each year?

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...

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