Thress Industries just paid a dividend of $3.25 a share (i.e., D0 = $3.25). The dividend is expected to grow 6% a year for the next 3 years and then 12% a year thereafter. What is the expected dividend per share for each of the next 5 years? Do not round intermediate calculations. Round your answers to the nearest cent.

D1 = $  

D2 = $  

D3 = $  

D4 = $  

D5 = $  

To calculate the expected dividend per share for each of the next five years, we will use the dividend growth formula:

\[
D_n = D_0 \times (1 + g)^n
\]

Where:
- $ D_n $ is the dividend in year $ n $,
- $ D_0 = 3.25 $ is the dividend just paid,
- $ g $ is the growth rate, which is 6% for the first 3 years and 12% thereafter.

### Step-by-Step Calculation:

#### 1. Year 1 (D1):
For the first year, the growth rate is 6%, so:
\[
D_1 = 3.25 \times (1 + 0.06) = 3.25 \times 1.06
\]
\[
D_1 = 3.445
\]

#### 2. Year 2 (D2):
For the second year, the growth rate is again 6%, so:
\[
D_2 = 3.445 \times (1 + 0.06) = 3.445 \times 1.06
\]
\[
D_2 = 3.6517
\]

#### 3. Year 3 (D3):
For the third year, the growth rate is still 6%, so:
\[
D_3 = 3.6517 \times (1 + 0.06) = 3.6517 \times 1.06
\]
\[
D_3 = 3.8708
\]

#### 4. Year 4 (D4):
From year 4 onward, the growth rate increases to 12%. For the fourth year:
\[
D_4 = 3.8708 \times (1 + 0.12) = 3.8708 \times 1.12
\]
\[
D_4 = 4.3353
\]

#### 5. Year 5 (D5):
For the fifth year, the growth rate remains 12%, so:
\[
D_5 = 4.3353 \times (1 + 0.12) = 4.3353 \times 1.12
\]
\[
D_5 = 4.8555
\]

### Final Results (rounded to the nearest cent):
- $ D_1 = 3.45 $
- $ D_2 = 3.65 $
- $ D_3 = 3.87 $
- $ D_4 = 4.34 $
- $ D_5 = 4.86 $

Would you like further details or explanations?

---

**Related Questions:**
1. What is the total dividend growth over the 5-year period?
2. How would the dividend change if the growth rates were different?
3. What is the present value of the dividends if discounted at 10%?
4. How does this dividend growth affect the stock price?
5. What happens if the 12% growth rate is only sustained for 2 years instead of permanently?

**Tip:** Always keep track of different growth rates across multiple time periods when forecasting dividends.

Thress Industries just paid a dividend of $3.25 a share (i.e., D0 = $3.25). The dividend is expected to grow 6% a year for the next 3 years and then 12% a year thereafter. What is the expected dividend per share for each of the next 5 years? Do not round intermediate calculations. Round your answers to the nearest cent. D1 = $  D2 = $  D3 = $  D4 = $  D5 = $

Learn how to calculate the expected dividend growth for Thress Industries, starting from a $3.25 dividend, with 6% annual growth for 3 years and 12% growth thereafter. This finance problem covers the dividend growth model and exponential growth concepts.

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