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Finding interest rate compounded annually watch

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    Hi!

    I am studying corporate finance and could not find in the book how to determine interest rate needed to get x amount of money.

    For instance, GE paid 2.45 billion dividends in 2012, and then it paid 3.68 billion in 2014.

    Over these two years, what is the annual growth rate?

    I suppose the formula might look like this?

    2.45 x (1+x%)(1+x%) = 3.68

    How do I find 'x'?
    ---

    Thank you for the help!

    Kind regards,
    Paul.
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    (Original post by Kinlejus)
    Hi!

    I am studying corporate finance and could not find in the book how to determine interest rate needed to get x amount of money.

    For instance, GE paid 2.45 billion dividends in 2012, and then it paid 3.68 billion in 2014.

    Over these two years, what is the annual growth rate?

    I suppose the formula might look like this?

    2.45 x (1+x%)(1+x%) = 3.68

    How do I find 'x'?
    ---

    Thank you for the help!

    Kind regards,
    Paul.
    This is just algebraic manipulation - divide by 2.45, take the square root and subtract 1, giving x = SQRT(3.68/2.45) - 1
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    Hi Illusionary,

    thank you!
 
 
 

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