The Brown Jug has paid annual dividends of $.51, $.54, $.61, $.72, and $.78 per share over the past 5 years, respectively. What is the geometric average dividend growth rate for this period?

Question

Quizplus · Accepted Answer

The formula for geometric average growth rate is:
[(Dividend in the fifth year / Dividend in the first year) ^ (1/number of years)] - 1

Plugging in the values:
[(0.78 / 0.51) ^ (1/5)] - 1 = 0.1121 or 11.21%

Therefore, choice C is the correct answer.

The Brown Jug Has Paid Annual Dividends of