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COST OF COMMON EQUITY The Bouchard Company's EPS was $5.92 in 2016, up from $3.52 in...

COST OF COMMON EQUITY

The Bouchard Company's EPS was $5.92 in 2016, up from $3.52 in 2011. The company pays out 45% of its earnings as dividends, and its common stock sells for $33.

  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 = 0.45($5.92) = $2.66. 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, rs? Round your answer to two decimal places. Do not round your intermediate calculations.
    %
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