Dividend growth rate is important to many investors.You are considering investing in a firm after looking at the firm's dividends over a six-year period.At the end of the year 2010,the firm paid a dividend of $0.98.At year-end 2016,it paid a dividend of $1.64.What was the average annual growth rate of dividends for this firm?
A)8.25%
B)9.86%
C)8.96%
D)There is not enough information to answer this question.

Question

Quizplus · Accepted Answer

The average annual growth rate can be calculated using the formula for compound annual growth rate (CAGR): CAGR = (Ending Value/Beginning Value)^(1/Number of Years) - 1. Using the given values: CAGR = ($1.64/$0.98)^(1/6) - 1 = 8.96%.

Dividend Growth Rate Is Important to Many Investors