Radon Homes' current EPS is $6.20. It was $4.09 5 years ago. The company pays out...

 

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Radon Homes' current EPS is $6.20. It was $4.09 5 years ago. The company pays out 30% of its earnings as dividends, and the stock sells for $34. a. Calculate the historical growth rate in earnings. (Hint: This is a 5-year growth period.) Do not round intermediate calculations. Round your answer to two decimal places. % b. Calculate the next expected dividend per share, D₁. (Hint: Do = 0.30($6.20) = $1.86.) Assume that the past growth rate will continue. Do not round intermediate calculations. Round your answer to the nearest cent. c. What is Radon's cost of equity, rs? Do not round intermediate calculations. Round your answer to two decimal places. Radon Homes' current EPS is $6.20. It was $4.09 5 years ago. The company pays out 30% of its earnings as dividends, and the stock sells for $34. a. Calculate the historical growth rate in earnings. (Hint: This is a 5-year growth period.) Do not round intermediate calculations. Round your answer to two decimal places. % b. Calculate the next expected dividend per share, D₁. (Hint: Do = 0.30($6.20) = $1.86.) Assume that the past growth rate will continue. Do not round intermediate calculations. Round your answer to the nearest cent. c. What is Radon's cost of equity, rs? Do not round intermediate calculations. Round your answer to two decimal places.

Answer rating: 100% (QA)

a To calculate the historical growth rate in earnings over a 5year period you can use the formula fo... View the full answer