Problem: Acme Products currently pays a dividend of $4 per share on its common stock.
Question 1: If Acme Products plans to increase its dividend at a rate of 5% per year indefinitely, what will be the dividend per share in 10 years?
Question 2: If Acme Products’ dividend per share is expected to be $5.87 per share at the end of 5 years, at what annual rate is the dividend expected to grow?