Carly owns stock in a company that consistently paid a growing dividend over the last five...

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Question

Carly owns stock in a company that consistently paid a growing dividend over the last five...

Carly owns stock in a company that consistently paid a growing dividend over the last five years. The first year Carly owned the stock, she received $1.71 per share and in the fifth year, she received $2.89 per share. What is the growth rate of dividends during this time?

7%

14%

12%

5%

business finance

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Answer 1

Answer #1

FV= PV*(1+r)^n

Where,
FV= Future Value
PV = Present Value
r = Interest rate
n= periods in number

2.89= $1.71*( 1+r)^4

2.89/1.71 = (1+r)^4

1.69006 =(1+r)^4

r= 0.14018

Growth rate = 14%

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Answer 2

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