If a firm’s earnings per share grew from $1 to $2 over a 10-year period, the total growth would be 100%, but the annual growth rate would be less than 10%. True or false Explain. (Hint: If you aren’t sure, plug in some numbers and check it out.)

belongs to book: FUNDAMENTALS OF FINANCIAL MANAGEMENT|Eugene F.Brigham, Joel F. Houston|12th Edition| Chapter number:5| Question number:3

Ibrahimhamm

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2022-07-10

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If a firm’s earnings per share grew from $1 to $2 over a 10-year period, the total growth would be 100%, but the annual growth rate would be less than 10%. True or false? Explain. (Hint: If you aren’t sure, plug in some numbers and check it out.)

True
False

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Ibrahimhamm

2022-07-10

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True

because of compounding effects - growth on growth

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If a firm’s earnings per share grew from $1 to $2 over a 10-year period, the total growth would be 100%, but the annual growth rate would be less than 10%. True or false Explain. (Hint: If you aren’t sure, plug in some numbers and check it out.)

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