The Bouchard Company’s EPS was $6.50 in 2018, up from $4.42 in 2013. The company pays out 40% of its earnings as dividends, and its common stock sells for $36.00. a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) b. The last dividend was D0 = 0.4($6.50) = $2.60. Calculate the next expected dividend, D1, assuming that the past growth rate continues. c. What is Bouchard’s cost of retained earnings, rs?
The Bouchard Company’s EPS was $6.50 in 2018, up from $4.42 in 2013. The company pays out 40% of its earnings as dividends, and its common stock sells for $36.00. a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) b. The last dividend was D0 = 0.4($6.50) = $2.60. Calculate the next expected dividend, D1, assuming that the past growth rate continues. c. What is Bouchard’s cost of retained earnings, rs?
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 9P
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The Bouchard Company’s EPS was $6.50 in 2018, up from
$4.42 in 2013. The company pays out 40% of its earnings as dividends, and its common
stock sells for $36.00.
a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.)
b. The last dividend was D0 = 0.4($6.50) = $2.60. Calculate the next expected dividend,
D1, assuming that the past growth rate continues.
c. What is Bouchard’s cost of
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