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Please if somebody know how to calculate it is question RZP Co from 2005. |Thanks
You cannot calculate the dividend growth rate using the RPI!!
What you can do is calculate the actual (or nominal) growth rate (using the actual dividends given in the question).
You can also calculate the real growth rate (i.e. the growth rate without inflation) by calculating what the dividends would have been if inflation was taken out. You can do this using the index numbers given.
So…..in the first year the actual dividend was 2.8c and the RPI was 117.
So removing inflation would give a dividend of 2.8 x 100/117 = 2.4cIn the same way, in the second year the ‘real’ dividend would be 2.3 x 100/113 = 2.0c
Once you have done this for all the dividends you can calculate the ‘real’ dividend growth rate.
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