Yutian owns stock in a company that has consistently paid a

Yutian owns stock in a company that has consistently paid a growing dividend over the last several years. At the end of the first year Yutian owned the stock, he received $1.70 per share and at the end of the sixth year he owned the stock, he received $2.34 per share. What is the growth rate of the dividends over this period assuming constant annual compound growth? Also, please show how to entering number in financial calculator HP 10bII+

Solution

CAGR = [Ending Value/Beginning Value]^1/n - 1

= ($2.34/$1.70)^1/6- 1 = 1.37^0.16677 - 1 = 1.0547 - 1 = 0.0547, or 5.47%