The Bouchard Companys current EPS is $6.50. It was $4.42 5 years ago. The company pays out
Question:
The Bouchard Company’s current EPS is $6.50. It was $4.42 5 years ago. The company pays out 40 percent of its earnings as dividends, and the stock sells for $36.
a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.)
b. Calculate the next expected dividend per share, D1. (D0 _ 0.4($6.50) = $2.60.) Assume that the past growth rate will continue.
c. What is the cost of equity, rs, for the Bouchard Company?
DividendA dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For 
Financial management theory and practice
ISBN: 978-0324422696
12th Edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
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