A company paid dividends of $2.80 per share in 2009, and just announced that it will...

Question

Question

A company paid dividends of $2.80 per share in 2009, and just announced that it will pay $9.55 in 2016. Estimate the compound

business finance

Answer 1

Answer #1

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

9.55=2.80*(1+r/100)^7

(9.55/2.80)^(1/7)=(1+r/100)

(1+r/100)=1.1916

r=1.1916-1

=19.16%(APPROX).

Answer 2

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