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Morning Sir,
I am F9 2014 question paper question 19.
I have calculated the growth rate as square root of (33.6/32) – 1 this gives me 2,5% as my g.
Looking at the answer they have calculated g as 100 x ((33.6/32)-1= 5%.
Is this the correct way to calculate g?
Between now and 1 years time is just 1 years growth, and therefore the 5% is correct.
There is growth of 33.6 – 32 = 1.6 over the year, which on the current dividend of 32 is 1.6/32 = 5%You would only take the square root if there were 2 years of growth.
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