Question

Find both the arithmetic growth rate and the geometric growth rate of the dividends for Queen...

Find both the arithmetic growth rate and the geometric growth rate of the dividends for Queen Bee Limited.

Year 2001 2002 2003 2004 2005
Dividend $       11.21 $       12.13 $       13.09 $       14.17 $       15.81
2006 2007 2008 2009 2010
$       16.14 $       17.24 $       18.36 $       18.75 $       16.61

What is the arithmetic growth rate of the dividends for Queen Bee Limited​? (Round to two decimal​ places.)

What is the geometric growth rate of the dividends for Queen Bee Limited​? (Round to two decimal​ places.)

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Homework Answers

Answer #1
Year Dividend Growth Working
2001 11.21
2002 12.13 8.21% ( 12.13-11.21)/11.21
2003 13.09 7.91% ( 13.09-12.13)/12.13
2004 14.17 8.25% ( 14.17-13.09)/13.09
2005 15.81 11.57% ( 15.81-14.17)/14.17
2006 16.14 2.09% ( 16.14-15.81)/15.81
2007 17.24 6.82% ( 17.24-16.14)/16.14
2008 18.36 6.50% ( 18.36-17.24)/17.24
2009 18.75 2.12% ( 18.75-18.36)/18.36
2010 16.61 -11.41% ( 16.61-18.75)/18.75
42.06%
/ 9
Average 4.67%

Average growth rate = 4.67%

Product of (Sum of 1+growth rate each year)  - 1 = 48.17%

Geometric growth rate is 48.17%

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