Project
Calculate the annual dividends that your company paid. Sum the four quarterly dividends paid between May of one year and April of the next year for each of the 5 years of data you have collected.
Make sure your data have been adjusted for splits. If you see the dividends have suddenly dropped by a large amount, it is likely that there has been a split and you will need to make an adjustment (for example, if there was a 2-for-1 split, you will need to divide all the dividends prior to the split by 2).
Calculate the annual growth rates of the dividends (i.e., the percentage change in annual dividends from one year to the next).
Calculate the average of your 4 annual growth rates. This is your value for g.
Estimate the total dividends that will be paid between May of this year and April of next year, assuming that the firm maintains its current average annual growth rate.
Calculate the firm’s expected rate of return using your calculated expected dividend, growth rate, and the unadjusted price for April 30 of this year.
