Four years ago, Bling Diamond, Inc., paid a dividend of $2.15 per share. The firm paid a dividend of $2.57 per share yesterday. Dividends will grow over the next five years at the same rate they grew over the last four years. Thereafter, dividends will grow at 4 percent per year. What will the firm’s cash dividend be in seven years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Cash dividend

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Asked Nov 2, 2019
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Four years ago, Bling Diamond, Inc., paid a dividend of $2.15 per share. The firm paid a dividend of $2.57 per share yesterday. Dividends will grow over the next five years at the same rate they grew over the last four years. Thereafter, dividends will grow at 4 percent per year.
 
What will the firm’s cash dividend be in seven years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
 
Cash dividend 

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Expert Answer

Step 1

Calculation of Cash Dividend:

The cash dividend is $3.47.

Excel Spreadsheet:

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А В 1 Dividend Paid 4 year ago 2 Dividend Paid Yesterday $2.15 $2.57 3 No. of Years 4 4% 4 Indefinite Growth Rate 5 Annual Growth Rate 4.56% $3.47 6 Cash Dividend

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