contestada

The Blue Shoppe has adopted a policy of increasing the annual dividend on its common stock at a constant rate of 1.65 percent annually. The firm just paid an annual dividend of $1.84. What will the dividend be eight years from now?

Respuesta :

Answer:

$2.10

Step-by-step explanation:

The annual dividend will be increased at a constant rate of 1.65% annually.

Therefore:

Let $1.84 be this years payment

For next year, payment = $1.84+(1.65% of $1.84) = 101.65% of $1.84

When we have sequences in which the next term is gotten by multiplication by a constant factor or percentage, it is a Geometric Sequence.

nth term of a Geometric Sequence, [tex]U_n=ar^{n-1}[/tex]

First term, a=1.84

Common ration=101.65%=1.0165

n=8+1=9

[tex]U_n=ar^{n-1}\\U_9=1.84 X 1.0165^{9-1}\\=1.84 X 1.0165^8\\=2.097[/tex]

The dividend 8 years from now will be $2.10.

Otras preguntas