Radon Homes' current EPS is $6.90. It was $4.64 5 years ago. The company pays out 60% of its earnings as dividends, and the stock sells for $31.

1. 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. %
2. Calculate the next expected dividend per share, D1. (Hint: D0 = 0.60($6.90) = $4.14.) Assume that the past growth rate will continue. Do not round intermediate calculations. Round your answer to the nearest cent. $
3. What is Radon's cost of equity, rs? Do not round intermediate calculations. Round your answer to two decimal places. %