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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
COST OF COMMON EQUITY   The Bouchard Company’s EPS was $6.50 in 2008, up from
$4.42 in 2003. The company pays out 40% of its earnings as dividends, and its common stock sells for $36.00.
a.       Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.)
b.      The last dividend was D0 = 0.4($6.50) = $2.60. Calculate the next expected dividend, D1, assuming that the past growth rate continues.
c.       What is Bouchard’s cost of retained earnings, rs?
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