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Calculate the next expected dividend per share

The Bouchard Company"s EPS was $6.50 in 2002 and $4.42 in 1997. The company pays out 40 percent 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, D₁. (D₀= 0.4($6.50) = $2.60.) Assume that the past growth rate will continue.

c. What is the cost of equity, rs, for the Bouchard Company?

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Calculate the next expected dividend per share

Reference No:- TGS0556286

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