1. Let's say a company pays a quarterly dividend. You just collected a $1 dividend today. Over the next five years, you expect the quarterly dividend to growth to the following amounts as of the end of each annual anniversary:
After 1 year, $1.1
After 2 years, $1.15
After 3 years , $1.25
After 4 years, $1.30
After 5 years, $1.45
1. Assuming annual compounding, what is the compounded annual growth rate of the dividend?
A) 7.7%
B) 9.1%
C) 6.7%
D) 8.7%
E) 9%
2. Installation costs are sunk costs that are not to be included as relevant in any capital budgeting decision.
True
False