Mobray corp. is experiencing rapid growth. dividends are expected to grow at 30 percent per year during the next three years, 20 percent over the following year, and then 5 percent per year indefinitely. the required return on this stock is 11 percent, and the stock currently sells for $60 per share. what is the projected dividend for the coming year?

The projected dividend for the coming year is 2.15

Explanation:

let D be next year dividend

D2 = D × 1.3 = 1.3D

D3 = D × 1.3^2 = 1.69D

D4 = D × 1.3^2 × 1.2

     = 2.028D

Dividends are expected to grow:

during the next three years, g1 = 30%

over the following year, g2 = 20%

then per year indefinitely, g3 = 5%

Required return on this stock, rr = 11%

                                  = 35.49D

current price = 60

D = 2.15

Therefore, the projected dividend for the coming year is 2.15

yes the correct answer was

b.the increased supply will create a surplus.