Author Question: Four years ago, Robert's annual salary was 52,500. Today, he earns 73,800. What has been the average ... (Read 87 times)

mpobi80 · **on:** Jul 10, 2018

Four years ago, Robert's annual salary was 52,500. Today, he earns 73,800. What has been the average annual rate of growth of Robert's salary?

A) 5,325 per year
B) 10.38
C) 41.52
D) 8.89

Question 2

Xiao Xin owns stock in a company which has paid the annual dividends shown in Table 7.1. Calculate the growth rate of these dividends.

What will be an ideal response?

Gabe · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: D
Explanation: D) r = (FV/PV)1/n - 1 = (73,800/52,500)1/4 - 1 = 8.89
MODE = END
INPUT 4 ? -52,500 0 73,800
KEY N I/Y PV PMT FV
CPT 8.89

Answer to Question 2

Constant growth rate = (2.89 / 1.5 )1/5 - 1 = 0.14 = 14