COST OF COMMON EQUITY 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 D 0 = 0.4($6.50) = $2.60. Calculate the next expected dividend, D 1 , assuming that the past growth rate continues. c. What is Bouchard's cost of retained earnings, r x ?
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 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, rx?
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