Growth rates and earnigs projection
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O'Neal's Men's Shops, Inc., specialized in large-size clothing. Business has been good, as indicated by the six-year growth in earnings per share. The earnings have grown from $1.00 to $1.87.
a. Use Appendix A to determine the compound annual rate of growth in earnings (n = 6).
b. Based on the growth rate determined in part a, project earnings for next year (E1). (Round to two places to the right of the decimal point.)
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Solution Summary
The solution explains how to determine the compound annual growth rate in earnings and use that to project the earnings for next year.
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a. FV = PV X (1+i)^n
In this question,
FV = 1.87, PV =1, n=6 and the i=growth rate is to ...
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