COST OF COMMON EQUITY The Bouchard Company’s EPS was $6 50 in 2015, up from $4 42 in 2010. 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 D 0 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, r s ?
Fundamentals of Financial Manageme...
Fundamentals of Financial Manageme...
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COST OF COMMON EQUITY The Bouchard Company’s EPS was $6 50 in 2015, up from $4 42 in 2010. 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?
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