• Memory, Inc. expects earnings per share this year to be $8. If earnings per share grow at an average annual rate of 6 percent and if Baker pays 60 percent of its earnings as dividends, what will the expected dividend per share be in 7 years?

  Answer: $8 (1 + 0.06)7 = $12.03 = Earnings per share in 7 years

  $12.03 × 0.6 = $7.22 = Expected dividends per share

  Required: where did we get the 1 from on the answer above?

Answer rating: 100% (QA)

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