# Expected Dividend Equation: Schweser vs CFAI

I’ve come across an instance where CFAI and Schweser have different formulas for the same concept that result in different answers. I’m guessing the CFAI formula is the one to trust. This is odd however, and the first time that I’ve seen something like this

Schweser:

Expected dividend = Previous dividend + (Expected increase in EPS × Target payout ratio × Adjustment factor)

CFAI:

Expected dividend = Previous dividend + (Expected earnings × Target payout ratio – Previous dividend) × Adjustment factor

I just did a CF practice problem on the CFAI site where they used this formula: Expected Dividend = Previous Dividend + Change in EPS X Target Payout Ratio X Adjustment Factor

Major inconsistencies… I always used the Schweser formula before and never had any issues… Today I ran into a practice problem from EOC in CFAI… Under formula 1, I got \$0.65 and formula 2 is \$0.68.

Answer said it was 0.68, said to use:

Expected dividend = Previous dividend + (Expected earnings × Target payout ratio – Previous dividend) × Adjustment factor

Schweser uses first formula.

In CFA books they use the second formula.

In CFA practice they used the first one.

I believe this formula was updated this year. The second formula is the updated version. It also makes more sense than the first one.

Yeh I even emailed the CFA institute to query the formula. They said the second one is the correct one to use. Really didn’t like the inconsistency.

Kaplan 2017, 2018 and CFA 2017 use the first formula

CFA 2018 use the second

if the second one is the correct one to use then how come to topic test answer is based on the first one…