Ref. CFAI textbook volume I page #288, problem 20 states that an analyst is analyzing the last 5 years of eps data. The figures are $4.00, $4.50, $5.00, $6.00 and $7.00. At what compound annual rate does the eps grow during these years? In the solution, N is taken as 4 to get 15.02 as the answer. Although I understand the working, I would like to know why N was taken as 4 while stating the eps grew at a rate of 15.02 % for 4 years when the number of years and data points are 5?
If the EPS figures are for 2008, 2009, 2010, 2011, 2012, then the periods are:
- 2008 to 2009
- 2009 to 2010
- 2010 to 2011
- 2011 to 2012
There are four periods.