Page 510 - FM Integrated WorkBook STUDENT 2018-19
P. 510
Chapter 21
Question 7
Estimating growth using past dividends
A company has paid the following dividends per share over the past few years:
20X1 25.0 cents
20X2 25.8 cents
20X3 26.5 cents
20X4 27.4 cents
20X5 28.1 cents
Estimate the annual growth rate in dividends.
1/n
g = (D 0/D n) – 1
1/4
g = (28.1/25.0) – 1
g = 0.030 or 3.0%
500
