Computing the growth rate of a company

Reference no: EM13826756

Problem:

ABC Co. has the following dividend payment history:

Year	Dividend
2003	$1.00
2004	1.15
2005	1.25
2006	1.35
2007	1.45

a. How many periods of growth are there in the information given?

b. What is the compound growth rate of dividends?

c. Calculate the year-to-year growth rates in dividends.

d. What is the average year-to-year dividend growth rate?

e. Assume a retention ratio of 0.45 and a historical return on equity (ROE) of 0.18. Using these two additional pieces of information, calculate an alternative estimate of dividend growth rate, g.

Additional Information:

This question is basically belongs to Finance as well as it explains about computing the growth rate of a company with the growth rate of dividends. The solution has all the calculations.

Reference no: EM13826756

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