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9-11, Radon Homes current EPS is $6.50. it was $4.42 5 years ago. The company pays out 40% of its earnings as dividends, and the
9-11, Radon Homes current EPS is $6.50. it was $4.42 5 years ago. The company pays out 40% of its earnings as dividends, and the stock sells for $36. a. Calculate the historical growth rate in earnings. (Hint: this is a 5 year growth period). b. Calculate the next expected dividend per share, D_1. (Hint: D_0 = 0.4 ($6.50) = $2.60.) Assume that the past growth rate will continue. c. What is Radons cost of equity, r_s?
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