COST OF COMMON EQUITY The Bouchard Companys EPS was $6 50 in 2014, up from $4 42
Question:
COST OF COMMON EQUITY The Bouchard Company’s EPS was $6 50 in 2014, up from
$4 42 in 2009. 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?
AppendixLO1
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Related Book For 
Fundamentals Of Financial Management Concise Edition
ISBN: 9781285065137
8th Edition
Authors: Eugene F. Brigham, Joel F. Houston
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