Chapter 9 – Assigned Problems(1) - Chapter 9 Assigned...

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Chapter 9 – Assigned ProblemsPROBLEMS9-1DPS calculation. Warr Corporation just paid a dividend of a $1.50 a share (that is, D0 = $1.50). The dividend is expected to grow 7 percent a year for the next 3 years and then at 5 percent a year thereafter. What is the expected dividend per share for each of the next 5 years? = ?
Chapter 9 – Assigned ProblemsPROBLEM 9-1D0 = $1.50; g1-3 = 7%; gn = 5%; D1 through D5 = ?D1 = D0(1 + g1) = $1.50(1 + .07) = $1.50(1.07) = $1.6050.By the aid of your financial calculator as follows:N = 1, I/Y = 7, PV = -1.50, PMT = 0, CPT FV = 1.6050D2 = D0(1 + g1)(1 + g2) = $1.50(1.07)2 = $1.7174.By the aid of your financial calculator as follows:N = 2, I/Y = 7, PV = -1.50, PMT = 0, CPT FV = 1.7174D3 = D0(1 + g1)(1 + g2)(1 + g3) = $1.50(1.07)3 = $1.8376.By the aid of your financial calculator as follows:N = 3, I/Y = 7, PV = -1.50, PMT = 0, CPT FV = 1.8376D4 = D0(1 + g1)(1 + g2)(1 + g3)(1 + gn) = $1.50(1.07)3(1.05) = $1.9294.By the aid of your financial calculator as follows:N = 3, I/Y = 7, PV = -1.50, PMT = 0, CPT FV = 1.8376= (1.8376)(1.05) = 1.9295D5 =  D0(1  +  g1)(1  +  g2)(1  +  g3)(1  +  gn)2 =  $1.50(1.07)3(1.05)2 =  $1.50(1.2250)(1.1025) = $2.0259.
Chapter 9 – Assigned ProblemsPROBLEMS

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