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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!

    x

    Paul.
    Not sure if the formula is right but if it is then
     2.45(1+x)^2 = 3.68



(1+x)^2 = \dfrac{3.68}{2.45} 

1+x=\sqrt\dfrac{3.68}{2.45} 

x={\sqrt\dfrac{3.68}{2.45}}-1

x=0.226 (3sf)
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    Oohh, so easy

    Thank you!
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    (Original post by Kinlejus)
    Oohh, so easy

    Thank you!
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    Good answer - if period of time is over 2 periods (normally measured in years) then same approach but you're finding the nth root - eg if over a 3 year period then same approach, but you're finding the Cube root of one no/another & then subtract 1


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