The Reading Co. has adopted a policy of increasing the annual dividend on its common stock at a constant rate of 3% annually. The last dividend it paid was $0.90 a share. What will the company's dividend be in six years?© BrainMass Inc. brainmass.com June 4, 2020, 4:45 am ad1c9bdddf
This is essentially a compounding interest problem. The formula to use to solve this problem is:
Future Dividend = Current ...
This solution provides a simple illustration of compounding interest using dividends as the example.