Annual dividends of Generic Electrical grew from 081 in 2012

Annual dividends of Generic Electrical grew from $0.81 in 2012 to $1.18 in 2017 What was the annual growth rate? (Round your answer to 2 declmal places.) Annual growth rate

Solution

Dividend in 2012 0.81 Dividend in 2017 1.18 years 5 Dividend Growth rate 1.18= 0.81*(1+Growth rate)^5 (1+Growth rate)^5= 1.18/0.81 (1+Growth rate)^5= 1.45679 (1+Growth rate)= (1.45678)^(1/5) (1+Growth rate)= 1.078149 Growth rate 0.078149 Growth rate 7.81%