How to: average annual growth

[macdakoo]

Hi,

I'd would like to know if there is a worksheet function that will allow
me to calculate
the average annual dividend growth for the last 5 years.

Here's my example:

YEAR ---- ANNUAL DIVIDEND
2001 ---- $0.12
2002 ---- $0.18
2003 ---- $0.29
2004 ---- $0.44
2005 ---- $0.69

Is there a quick way to calculate the average annual dividend growth?

thanks in advance!

 

[Bob Phillips]

=AVERAGE((B2:B5-B1:B4)/B1:B4)

which is an array formula, it should be committed with Ctrl-Shift-Enter, not
just Enter.

--
HTH

Bob Phillips

(remove xxx from email address if mailing direct)

 

[Guest]

Disregard the intermediate values:

Use (Last-First)/4 or .1425.:



Here is the comparison of growth vs average growth

0.12 0.1200
0.18 0.2625
0.29 0.4050
0.44 0.5475
0.69 0.6900

This corresponds to a 54.87% average increase.

 

[Guest]

I'd would like to know if there is a worksheet function that
will allow me to calculate the average annual dividend growth
for the last 5 years. Here's my example:
YEAR ---- ANNUAL DIVIDEND
2001 ---- $0.12
2002 ---- $0.18
2003 ---- $0.29
2004 ---- $0.44
2005 ---- $0.69

As used in financial models (e.g. Gordon Growth Model), I
believe the annual dividend growth rate is the __geometric__
average rate. This could be computed as follows:

=(0.69/0.12)^(1/4) - 1

But that is the same as asking for the "interest" rate for a
PV of 0.12 that grows to a FV of 0.69 in 4 periods. The
Excel function for that is:

=RATE(4,, -0.12, 0.69)