Which one of the following is a correct formula for computing a geometric average dividend growth rate? A) [(1 + D₀) + (1 + D₁) × (1 + D_N)]^{N + 1} - 1 B) [(1 + D₀) × (1 + D₁) × (1 + D_N)]^{N - 1} - 1 C) [D_N/D₀]^1/N - 1 D) [D₀/D_N]^N - 1 E) [D_N/D₀]^N/1 - 1

Question

Quizplus · Accepted Answer

The geometric average growth rate is calculated using the formula [D_N/D₀]^1/N - 1, which accounts for compounding over N periods.

Which One of the Following Is a Correct Formula for Computing