Question

Find both the arithmetic growth rate and the geometric growth rate of the dividends for Duck's Limite.

Year	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
Dividend	​$1.49	​$2.19	​$3.42	​$4.31	​$5.56	​$6.32	​$7.12	​$8.38	​$8.42	​$6.78

What is the arithmetic growth rate of the dividends for Duck's Limite​?

​(Round to two decimal​ places.)

What is the geometric growth rate of the dividends for Duck's Limite?

​(Round to two decimal​ places.)

Answer 1

R1 = 2.19/ 1.49 - 1 = 46.98%

R2 = 3.42/ 2.19 - 1 = 56.16%

R3 = 4.31/ 3.42 - 1 = 26.02%

R4 = 5.56/ 4.31 - 1 = 29.00%

R5 = 6.32/ 5.56 - 1 = 13.67%

R6 = 7.12/ 6.32 - 1 = 12.66%

R7 = 8.38/ 7.12 - 1 = 17.70%

R8 = 8.42/ 8.38 - 1 = 0.48%

R9 = 6.78/ 8.42 - 1 = -19.48%

Arithmetic Return = (46.98% + 56.16% + 26.02% + 29.00% +  13.67% +  12.66% +  17.70% +  0.48% - 19.48%)/ 9

Arithmetic Return = 20.35%

Part B

Geometric Return = (6.78/ 1.49)^1/9 - 1

Geometric Return = 18.34%