Anders owns stock in a company which has consistently paid a growing dividend over the last 10 years.The first year Alexis owned the stock, he received $4.50 per share and in the 10th year, he received $4.92 per share.What is the growth rate of the dividends over the last 10 yearsduring this time?
A)8%
B)4%
C)2%
D)1%

Question

Quizplus · Accepted Answer

The growth rate can be calculated using the formula for compound annual growth rate (CAGR): CAGR = (Ending Value/Beginning Value)^(1/Number of Years) - 1. Here, CAGR = ($4.92/$4.50)^(1/10) - 1 ≈ 0.009 or 1%.

Anders Owns Stock in a Company Which Has Consistently Paid