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Case study of bouchard company

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Reference no: EM133111668

Bouchard Company's current earnings per share are $ 6.50; five years ago it was $ 4.42.  The company paid 40% of profit as dividends and the shares worth $ 36 each.

  • Calculate the historical rate of profit growth. (Hint: we are talking about a 5-year growth period.)
  • Calculate the next expected dividend, D1.  (D0 = 0.4 ($ 6.50) = $ 2.60), suppose the growth rate will be stable.
  • What will the company's cost of capital (CCC) be?

Reference no: EM133111668

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