Answer to Question #144357 in Financial Math for Eric

Question #144357
c) Fanta ltd has a dividend cover of five (5) times and recorded the following earnings after tax; 
YEAR EARNINGS $
2011 100,000
2012 120,000
2013 180,000
2014 220,000
2015 300,000
Calculate the average dividend growth rate for Fanta ltd.
1
Expert's answer
2020-11-22T18:43:18-0500

Divided growth in 2012

=[1200001000001]×100%=20%=[\frac{120000}{100000}-1]\times100\% = 20\%

Divided growth in 2013

=[1800001200001]×100%=50%=[\frac{180000}{120000}-1]\times100\% = 50\%

Divided growth in 2014

=[2200001800001]×100%=22.2%=[\frac{220000}{180000}-1]\times100\% = 22.2\%

Divided growth in 2015

=[3000002200001]×100%=36.4%=[\frac{300000}{220000}-1]\times100\% = 36.4\%

Therefore, Average growth Rate

n=20152011=4n=2015-2011=4

=20+50+22.2+36.44=32.15%=\frac{20+50+22.2+36.4}{4}=32.15\%


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