Dividend growth rate is important to many investors. You are considering investing in a firm after looking at the firm's dividends over a seven-year period. At the end of the year 2002, the firm paid a dividend of $1.15
At year-end 2009, it paid a dividend of $1.84. What was the average annual growth rate of dividends for this firm?
A) 7.25%
B) 9.86%
C) 6.94%
D) There is not enough information to answer this question.
Answer: C
Explanation: C) r = (FV/PV)1/n - 1 = ($1.84/$1.15)1/7 - 1 = 6.94%
MODE = END
INPUT 7 ? -1.15 0 1.84
KEY N I/Y PV PMT FV
CPT 6.94
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