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sir,
I am struggling with the working of average dividend growth rate.
How did the examiner worked to get a 3.1%??Thank you.
The dividend has grown from 40c to 42.5c over 2 years.
Therefore, if the growth rate is g, then:
g = (square root of 42.5/40.0 ) – 1 = 0.031 (or 3.1%)
I do explain the calculation of past growth rates in my free lectures (and it is commonly required in the exam). The lectures are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.
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