Pittsburgh Ecological Technology (PET) has been growing at a constant 4 percent rate for more than 10 years, and this growth is epxected to continue forever. Last year PET paid a dividend equal to $2.50 per share. If dividends grow at the same rate as the company's growth rate, what should be the per share dividend that PET pays this year?

Question

Quizplus · Accepted Answer

The dividend this year can be calculated by growing last year's dividend by the growth rate: $2.50 * (1 + 0.04) = $2.50 * 1.04 = $2.60.

Pittsburgh Ecological Technology (PET) Has Been Growing at a Constant