Hi, I am working on the following question and I am on part ‘e’: ABC Co. has the following dividend payment history for the last five years, with the…

$2.00 $2.50 $2.90 $3.20 $3.60 Historical growth rate estimation

a. What is the compound growth rate of dividends based on the last five years of dividends data? (2 marks)

b. Calculate the year-to-year growth rates in dividends. (2 marks)

c. What is the average year-to-year dividend growth rate? (1 mark)

d. ABC has a retention ratio of 0.75 and a historical return on equity (ROE) of 0.2.

Using these two additional pieces of information, calculate an alternative estimate of dividend growth rate, g. (1 mark) Dividend growth model

e. Given that ABC’s share price is currently $65, and the most recent dividend paid is $3.60 per share, use the three growth rates estimated for historical growth (com- pound growth rate, average year-to-year growth rate, and alternative estimate) to calculate the cost of equity using the dividend growth model

How do you calculate the growth rate using the alternative estimate?  I can not figure out to get the retention ratio and ROE from the information given.

Thank you

Show more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10