Alexis owns stock in a company which has consistently paid a growing dividend over the last 10 years. The first year Alexis owned the stock, she received $4.50 per share and in the 10th year, she received $4.92 per share. What is the growth rate of the dividends over the last 10 years?
A) 5 percent
B) 4 percent
C) 2 percent
D) 1 percent

Question

Quizplus · Accepted Answer

The growth rate can be calculated using the formula for compound annual growth rate (CAGR): CAGR = (Ending Value/Beginning Value)^(1/Number of Years) - 1. Plugging in the values: CAGR = ($4.92/$4.50)^(1/10) - 1 ≈ 0.0091 or 0.91%, which is approximately 1 percent.

Alexis Owns Stock in a Company Which Has Consistently Paid