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A company is just about to pay dividend of 50 cents. Four years ago its dividend was 28 cents. What was the average annual growth over four years?

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Question added by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
Date Posted: 2016/04/29
Frank Mwansa
by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER

Step 1. The most recent dividend, d4, is 50cents

Step 2 The historic dividend, do, is 28cents

Step 3 applying the formula 28 x (1+g)1/4 =50cents or rearranging

1+g=(50/28)1/4 = (1.7857)1/4 = 1.15598

g=15.6%

Muhammad Saif ud-din Qureshi
by Muhammad Saif ud-din Qureshi , Freelance QHSE & other Management Systems Auditing, Compliance, Development, Training & Maintenance , Working as a Free Lancer

Company Paid now% , whereas four year ago%, so if Four year back it was2.8 on a share of and now it5.0, which makes it2.2 as growth.

So as per static growth5-2.8 =2.2/2.8/4  =. % per Year.

On Cumulative or Cyclic growth in First three years it is% and in last year%.

 

tamer badran
by tamer badran , chief accountant , zaid alkazemi sons International for gen. trd. & cont. co.

i'd like to join even if i'm wrong and waiting for correct answer but i think it should be 50 cent / 28 cent / 4 years = 44.6% average growth /year , as i get from question and i quot "dividend of 50 cent" for each share not 50 per cent for each year , ^_^ thanks for the great question Frank 

Dasarathi Rath
by Dasarathi Rath , Sr. Accountant , Al Luban Special Investment LLC

Company now paid 50 % dividend. Four year ago paid 28 % dividend Growth for four years dividend =50-28 = 22 %, Average growth annually =22/4=5.5 %

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