Harris Brothers just announced it will be paying an annual dividend of $0.85 a share plus an extra dividend of $0.30 a share this year. The company also announced that its regular dividend, which is all it anticipates paying after this year, will increase by 3.5 percent annually. What is the anticipated dividend per share next year?

Question

Quizplus · Accepted Answer

To calculate the anticipated dividend per share for next year, we need to first determine the total dividend for this year. 
Total dividend per share for this year = Regular dividend + Extra dividend = $0.85 + $0.30 = $1.15.

As the company plans to increase its regular dividend by 3.5 percent annually, the anticipated dividend per share for next year would be: 
Anticipated regular dividend per share for next year = Regular dividend for this year x (1 + Growth rate) 
= $0.85 x (1 + 0.035) 
= $0.88.

Therefore, the best choice is C, $0.88.

Harris Brothers Just Announced It Will Be Paying an Annual