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    Bouchard Company: calculate growth rate, expected dividends

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    The Bouchard Company's current EPS is $6.50. It was $4.42 5 years agon. The company pays out 40% of its earnings as dividends, and the stock sells for $36.
    a) Calculate the past growth rate in earnings.
    b) Calculate the next expected dividend per share. Assume that the past growth rate will continue.
    c) What is the cost of equity, for Bouchard Company?

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    Solution Preview

    a) To solve this question, let us make use of Excel (you can also use a financial calculator to solve this). Use the following formula in excel to get annual growth ...

    Solution Summary

    The solution uses an example to calculate the growth rate and expected dividends