Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Radon Homes’ current EPS is $6.50. It was $4.42 5 years ago. The company pays
out 40% of its earnings as dividends, and the stock sells for $36.
a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth
period.)
b. Calculate the next expected dividend per share, D1 [D0 0.4($6.50) $2.60].
Assume that the past growth rate will continue.
c. What is the
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