Calculate the past growth rate in earnings

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Reference no: EM131734423

The Bouchard Company's EPS was $6.50 in 2016, up from $4.42 in 2011. The company pays out 45% of its earnings as dividends, and its common stock sells for $32.

  1. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two decimal places.
  2. The last dividend was D0 = 0.45($6.50) = $2.93. Calculate the next expected dividend, D1, assuming that the past growth rate continues. Do not round off intermediate calculations. Round your answer to the nearest cent
  3. What is Bouchard's cost of retained earnings, rs? Round your answer to two decimal places. Do not round your intermediate calculations.

Reference no: EM131734423

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