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Find both the arithmetic growth rate and the geometric growth rate of the dividends for Custer's Ice Cream Shoppes.
​Year: 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Dividend​: $1.49 ​$2.07 ​$3.37 ​$4.19 ​$5.88 ​$6.69 ​$7.16 ​$8.36 ​$7.64 ​$6.39

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hyderali230

Answer:

Arithmetic Growth rate is about 19.89%

Geometric Growth rate is about 23.44%  

Explanation:

Dividend Arithmetic Growth rate is calculated as follows

Step 1:

Find the growth rate of each year

Step 2:

Take its sum

Step 3:

Make an average by dividing the sum of all growths by Number of years in  growth.

Dividend Arithmetic Growth rate is calculated as follows

Step 1:

Find the growth rate of each year

Step 2:

Take sum of all positive growth rates because geometric mean does not include the negative values.

Step 3: Multiply every growth and take the square root of the resultant product of these growths.

A MS Excel File is attached for the working. please find it.

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