Radon Homes's current EPS is $6.25. It was $3.88 5 years ago. The company pays out 55% of its earnings as dividends, and the stock sells for $34.

a) Calculate the historical growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two decimal places.

b) Calculate the next expected dividend per share, D₁ (Hint: D₀ = 0.55($6.25) = $3.44). Assume that the past growth rate will continue. Round your answer to the nearest cent.

c) What is Radon's cost of equity, r_s? Round your answer to two decimal places.