What is the implied growth duration of Freed Industries given the following: $$\begin{array} { l c c }
& \text { S\&P Industrials } & \text { Freed Industries } \
\hline \text { P/E Ratios } & 19 & 22 \
\text { Average Growth (\%) } & 11.0 & 16.0 \
\text { Dividend Yield } & .033 & .08
\end{array}$$
A)1.8 years
B)1.3 years
C)5.0 years
D)4.5 years
E)3.5 years

Question

What is the implied growth duration of Freed Industries given the following: $$\begin{array} { l c c } 
& \text { S\&P Industrials } & \text { Freed Industries } \
\hline  \text { P/E Ratios } & 19 & 22 \
\text { Average Growth (\%) } & 11.0 & 16.0 \
\text { Dividend Yield } & .033 & .08
\end{array}$$
A)1.8 years
B)1.3 years
C)5.0 years
D)4.5 years
E)3.5 years

Quizplus · Accepted Answer

The implied growth duration is calculated as the difference between the P/E ratio and the dividend yield divided by the average growth rate. For Freed Industries, this is (22 - 0.08) / 0.16 = 1.8 years.

What Is the Implied Growth Duration of Freed Industries Given