04-05-2010, 08:46 PM
i m Agreed with the solution provided by Muhammad Aamir but i would like to contribute something more.
the Growth rate can also be calculated by the help of this formula which can be termed as statistical method. it is the same formula used in calculating present and future value in case of Compound Interest.
Following is the Formula
s=p*(1+i)^n
where S is the latest dividend which is 10.5 in this Question
p is the earliest dividend i-e 3.5
i= growth rate i-e to be calculated
^= sign of power(it is there in calculator)
n= n is the number of years during which dividend grows from earliest to latest i-e 10 in the above case
it gives the same Answer which was Calculated by Muhammad Aamir
the other part can be solved in the same way as Muhammad Aamir did.Use Gordan's Growth Model.
the Growth rate can also be calculated by the help of this formula which can be termed as statistical method. it is the same formula used in calculating present and future value in case of Compound Interest.
Following is the Formula
s=p*(1+i)^n
where S is the latest dividend which is 10.5 in this Question
p is the earliest dividend i-e 3.5
i= growth rate i-e to be calculated
^= sign of power(it is there in calculator)
n= n is the number of years during which dividend grows from earliest to latest i-e 10 in the above case
it gives the same Answer which was Calculated by Muhammad Aamir
the other part can be solved in the same way as Muhammad Aamir did.Use Gordan's Growth Model.
