Calculate the historical growth rate in earnings

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Reference no: EM132045489

Cost of Equity

Radon Homes's current EPS is $7.10. It was $3.85 5 years ago. The company pays out 40% of its earnings as dividends, and the stock sells for $30.

Calculate the historical growth rate in earnings. Round your answer to two decimal places. (Hint: This is a 5-year growth period.)

____%

Calculate the next expected dividend per share, D1 Assume that the past growth rate will continue. Round your answer to the nearest cent. (Hint: D0 = 0.40($7.10) = $2.84).

$ ____

What is Radon's cost of equity, rs? Round your answer to two decimal places.

_____%

Reference no: EM132045489

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