Portman Industries just paid a dividend of $2.16 per share. Portman expects dividends to grow by 12%

Question:

Portman Industries just paid a dividend of $2.16 per share. Portman expects dividends to grow by 12% over the next year. The next year, the dividend is expected to grow at a constant rate of 2.4% per year.

The risk free rate is 3%, the market risk premium is 3.6% & the beta is 1.10. The market is at equilibrium, using the above information:

What are the dividends 1 year from now?

1. 2.7746

2. 2.5368

3. 2.4192

4. 2.4773

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...