Calculate the historical growth rate in earnings

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Reference no: EM13921315

Radon Homes current EPS is $6.50. It was $4.42 five years ago. The company pays out 40% of its earnings as dividends and the stock sells for $36.

(a) Calculate the historical growth rate in earnings (hint this is a 5-year growth period.) show all work and formulas to support answer

(b) Calculate the next expected dividend per share D1. (Hint Do = 0.4 ($6.50) = $2.60.) Assume that the past growth rate will continue. show all work and formulas

Reference no: EM13921315

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