Radon Homes's current EPS is $6.06. It was $4.47 5 years ago. The company pays out 50% of its earnings as dividends, and the stock sells for $32.
Calculate the historical growth rate in earnings. Round your answer to two decimal places. (Hint: This is a 5-year growth period.)
____________ %
Calculate the next expected dividend per share, D1 Assume that the past growth rate will continue. Round your answer to the nearest cent. (Hint: D0 = 0.50($6.06) = $3.03).
________$
What is Radon's cost of equity, rs? Round your answer to two decimal places.
_________ %