Ernst Electrical increases its annual dividend by 1.8 percent annually.The stock commands a market rate of return of 18 percent and sells for $19.07 a share.What is the expected amount of the next dividend?

Name: Ernst Electrical increases its annual dividend by 1.8 percent annually.The stock commands a market rate of return of 18 percent and sells for $19.07 a share.What is the expected amount of the next dividend?
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Question

Quizplus · Accepted Answer

$19.07 = D₁/ (0.18 - 0.018) D₁ = $3.09

Ernst Electrical Increases Its Annual Dividend by 1