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COST OF CAPITAL
Growth rates
Example 2:
In 1996 the company paid a dividend of R12,634. In 2001 they have
proposed a dividend of R22,265. Estimate the growth in dividends.
PV = -12.634
FV = 22.265
n = 5
∴i = 12% per annum
Example 3:
Dividend growth was 10% from 1999 – 2000 and 8% from 2000 – 2001.
What is the average dividend growth rate?
10 + 8 = 9%
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