Calculate the historical growth rate in earnings

Assignment Help Financial Management

Reference no: EM131012797

Radon Homes's current EPS is $7.95. It was $3.70 5 years ago. The company pays out 40% of its earnings as dividends, and the stock sells for $35.

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

2. Calculate the next expected dividend per share, D1 (Hint: D0 = 0.40($7.95) = $3.18). Assume that the past growth rate will continue. Round your answer to the nearest cent.

3. What is Radon's cost of equity, rs? Round your answer to two decimal places. %

Reference no: EM131012797

Questions Cloud

Use of personal borrowing to change the overall amount : The use of personal borrowing to change the overall amount of financial leverage to which Individual is exposed is called

Semi-strong form of the efficient market hypothesis states : The semi-strong form of the efficient market hypothesis states:

Value of the retained earnings account after the dividend : Davidsons has 15,000 shares of stock outstanding with a par value of $1 per share and a market value of $45 per share. The balance sheet shows $15,000 in the common stock account, $158,000 in the capital in excess of par account, and $132,500 in the ..

Write an essay about juvenile confession : For this week's assignment, you will write a 1-2 page (250-300 words) essay about juvenile confession. Be sure to address all prompts and cite your sources in APA format

Calculate the historical growth rate in earnings : Radon Homes's current EPS is $7.95. It was $3.70 5 years ago. The company pays out 40% of its earnings as dividends, and the stock sells for $35. Calculate the historical growth rate in earnings. What is Radon's cost of equity, rs?

Determine the corresponding radius of curvature : The symmetrical beam shown is made of a material for which the allowable stress is 40 MPa in tension and 100 MPa in compression. Locate its centroid. Calculate the centroidal moment of inertia that will resist the bending moment.

Explain how the sarbanes-oxley act affects the internal : Discuss auditing around the computer and through the computer, the relevance of each, and how it affects your organization or an organization of your choosing.

Problem regarding the pricing policy : How often should Pegasus transport engines and in what quantity? Supercheap Inc. offered to transport engines for Pegasus with the following pricing policy: for each trip a fixed $1,000 is charged; if the amount of engines transported is more than..

What is the present value of annuity : An annuity immediate provides 15 payments of $600 every month. After that the payments increase by $40 each month for an additional 20 months. After that, the payments decrease by $10 every month until payments reach $0. If the nominal annuity rate o..

User Account

All Pages