Ross Corporation paid dividends per share of $1.20 at the end of 1990. At the end of 2000, it paid dividends per share of $3.50. Calculate the compound annual growth rate in dividends.

Question

Quizplus · Accepted Answer

The compound annual growth rate (CAGR) can be calculated using the formula: $$CAGR = \left( \frac{FV}{PV} \right)^{\frac{1}{n}} - 1$$ where FV is the future value ($3.50), PV is the present value ($1.20), and n is the number of periods (10 years). Plugging in the values: $$CAGR = \left( \frac{3.50}{1.20} \right)^{\frac{1}{10}} - 1 \approx 0.1129$$ or 11.29 percent.

Ross Corporation Paid Dividends Per Share of $1