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Essentials Of Investments
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
Section: Chapter Questions
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fx A B C E F G H K L M 1 COST OF COMMON EQUITY The Bouchard Company's EPS was $6.50 in 2018, up from $4.42 in 2013. The company pays out 40% of its earnings as dividends, and its common stock sells for $36.00. 10-16 3 4 a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) b. The last dividend was D, = 0.4($6.50) = $2.60. Calculate the next expected dividend, D,, assuming that the past growth rate continues. c. What is Bouchard's cost of retained earnings, r̟? 5 6 7 8. 9. 10
Transcribed Image Text:fx A B C E F G H K L M 1 COST OF COMMON EQUITY The Bouchard Company's EPS was $6.50 in 2018, up from $4.42 in 2013. The company pays out 40% of its earnings as dividends, and its common stock sells for $36.00. 10-16 3 4 a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) b. The last dividend was D, = 0.4($6.50) = $2.60. Calculate the next expected dividend, D,, assuming that the past growth rate continues. c. What is Bouchard's cost of retained earnings, r̟? 5 6 7 8. 9. 10
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