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Question 10.EX.5: INTEREST RATES Consider the growth rate of dividends for Gen...

INTEREST RATES

Consider the growth rate of dividends for General Electric. General Electric pays dividends each year. In 1996, for example, General Electric paid dividends of $0.317 per share of its common stock, whereas in 2006 the company paid $1.03 in dividends per share in 2006.

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This represents a growth rate of 12.507%:

i = \sqrt[10]{\frac{ \$ 1.03}{ \$ 0.317} }   – 1 = 12.507%

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