Mountain fresh growth, Financial Management

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The Mountain Fresh Company had earnings per share (EPS) of $6.32 in 2006 and $11.48 in 2011.  The company pays out 30 percent of its earnings as dividends per share (DPS), and the company's stock price is presently $37.50 (in 2011).

(a)  Determine the growth rate in dividends (g) over this 5-year period.

(b)  Determine the expected dividend per share next year (i.e., what is D1, suppose the earnings and dividends of Mountain Fresh growth at a constant rate).

 

 


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