Question

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?"

Answer 1

Answer:

growth rate is 0.9%

Explanation:

given data

time = 10 year

present value = $4.50

future value = $4.92

to find out

growth rate

solution

we will apply here future value formula that is

future value = present value × $(1+\frac{r}{100})^{t}$   ......1

here r is growth rate and t is time

put here value in equation 1

future value = present value × $(1+\frac{r}{100})^{t}$

4.92 = 4.50 × $(1+\frac{r}{100})^{10}$

$(1+\frac{r}{100})$ = 1.009

r = 1.009 -1

r = 0.9 %

so growth rate is 0.9%