The Bouchard Company's EPS was $6.50 in 2021, up from $4.42 in 2016. The company pays out 30% of its earnings as dividends, and its common stock sells for $32.00. a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two decimal places. % b. The last dividend was Do = 0.30 ($6.50) = $1.95. 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. 5 c. What is Bouchard's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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The Bouchard Company's EPS was $6.50 in 2021, up from $4.42 in 2016. The company pays out 30% of its
earnings as dividends, and its common stock sells for $32.00.
a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two
decimal places.
%
b. The last dividend was Do = 0.30 ($6.50) = $1.95. 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.
$
c. What is Bouchard's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to
two decimal places.
%
Transcribed Image Text:The Bouchard Company's EPS was $6.50 in 2021, up from $4.42 in 2016. The company pays out 30% of its earnings as dividends, and its common stock sells for $32.00. a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two decimal places. % b. The last dividend was Do = 0.30 ($6.50) = $1.95. 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. $ c. What is Bouchard's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. %
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