Question
Radon Homes' current EPS is $6.50. It was $4.42 five years ago. The company pays out 40% of its earnings as dividends, and the stock
Radon Homes' current EPS is $6.50. It was $4.42 five 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, D1. (Hint: D0 = 0.4($6.50) =
$2.60.) Assume that the past growth rate will continue. c. What is Radon Homes' cost of equity, rs?
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Fundamentals Of Advanced Accounting
Authors: Joe Hoyle
4th Edition
78136636, 978-0078136634
