Bouchard Company's current earnings per share are $ 6.50; five years ago it was $ 4.42. The company paid 40% of profit as dividends and the shares worth $ 36 each.

• Calculate the historical rate of profit growth. (Hint: we are talking about a 5-year growth period.)
• Calculate the next expected dividend, D₁. (D₀ = 0.4 ($ 6.50) = $ 2.60), suppose the growth rate will be stable.
• What will the company's cost of capital (CCC) be?

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