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Please sir, what is the formular for Equivalent annual growth in say dividend, that have dividend value of 11 in yearr 1 and 22 in year 5?
There have been 4 years of growth between the first and the fifth year.
Therefore the average annual rate of growth is: (the fourth root of 22/11) – 1 = 0.1892 (or 18.92% per year).
I do explain this in my free lectures on the cost of equity. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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