The Bouchard Company's EPS was $6.50 in 2016, up from $4.42 in 2011. The company pays out 40% of its earnings as dividends, and its common stock sells for $36.

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($6.50) = $2.60. Calculate the next expected dividend, D₁, assuming that the past growth rate continues. Do not round off intermediate calculations. Round your answer to the nearest cent. $
3. What is Bouchard's cost of retained earnings, r_s? Round your answer to two decimal places. Do not round your intermediate calculations. %