The Bouchard Company's EPS was $5.90 in 2018, up from $3.47 in 2013. The company pays out 40% of its earnings as dividends, and its common stock sells for $37.00.

1. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two decimal places. %
2. The last dividend was D₀ = 0.40($5.90) = $2.36. Calculate the next expected dividend, D₁, assuming that the past growth rate continues. Do not round intermediate calculations. Round your answer to the nearest cent. $
3. What is Bouchard's cost of retained earnings, r_s? Do not round intermediate calculations. Round your answer to two decimal places. %