w6-a

our years ago, Bling Diamond, Inc., paid a dividend of $1.65 per share. The company paid a dividend of $2.10 per share yesterday. Dividends will grow over the next five years at the same rate they grew over the last four years. Thereafter, dividends will grow at 5% per year. 

• What will the company’s dividend be in seven years?
• Based on the dividend growth model, what are the two components of the total return on a share of stock? Which do you think is typically larger?