Calculate the historical growth rate in earnings hint this

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Radon Homes' current EPS is $6.46. It was $4.89 five years ago. The company pays out 30% of its earnings as dividends, and the stock sells for $33.

a. Calculate the historical growth rate in earnings. (Hint: This is a 5-year growth period.)

b. Calculate the next expected dividend per share, D1. Assume that the past growth rate will continue.

c. What is Radon Homes' cost of equity, rs?

Reference no: EM13480407

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