Question

Find the average annual growth rate of the dividends for each firm listed in the following table.

Dividend Payment per Year

Firm 2006 2007 2008 2009 2010 2011

Loewen $1.01 $1.05 $1.30 $1.21 $1.25 $1.30

Morse $1.00 $0.80 $0.80 $1.30 $1.35 $1.40

Huddleston $1.75 $2.75 $3.50 $3.75 $4.00 $5.25

Meyer $2.00 $2.20 $2.00 $2.72 $2.80 $2.95

Answer 1

Loewen

Annual average growth rate

=((last value/First value)^(1/Time between 1st and last value)-1)*100

=((1.3/1.01)^(1/5)-1)*100

Annual Growth rate% = 5.18

Morse

Annual average growth rate

=((last value/First value)^(1/Time between 1st and last value)-1)*100

=((1.4/1)^(1/5)-1)*100

Annual Growth rate% = 6.96

Huddleston

Annual average growth rate

=((last value/First value)^(1/Time between 1st and last value)-1)*100

=((5.25/1.75)^(1/5)-1)*100

Annual Growth rate% = 24.57

Meyer

Annual average growth rate

=((last value/First value)^(1/Time between 1st and last value)-1)*100

=((2.95/2)^(1/5)-1)*100

Annual Growth rate% = 8.08