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Hello,
I have a question related to RZP Co, from BPP Practice and revision kit.
How the real dividend per share is calculated?(2.4, 2, 2, 2,1 and 1.7)
Thank yoiI do not have the BPP Revision Kit, but I know the question.
You need to use the general price index numbers.
What they mean is that something that was $100 in 2000 would have been $105 in 2001. (i.e. 5% higher). Similarly it would be $110 in 2002 (i.e. 10% higher than in 2000).So, to remove the inflation from the dividends (to get the ‘real’ dividend) you need for 2001 to take the actual dividend (2.2p) and multiply by 100/105, which gives 2.1p. Similarly, for 2002 you take the real dividend of 2.2p and multiply by 100/110, which gives 2p.
And so on for each year.
(Index numbers are not listed in the F9 syllabus, but they are assumed knowledge from Paper F2. If you want to know more about index numbers then you can find them in our F2 Course Notes (and also our F2 lectures)).
It’s really helpful!
What about the share price for each year? Unable to figure it out…
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