Compute the past growth rate in earnings

Question

The Bouchard Company's EPS was $5.92 in 2012, up from $3.52 in 2007. The company pays out 55% of its earnings as dividends, and its common stock sells for $38.

1. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two decimal places.
2. The last dividend was D₀ = 0.55($5.92) = $3.26. Calculate the next expected dividend, D₁, assuming that the past growth rate continues. Round your answer to the nearest cent.
3. What is Bouchard's cost of retained earnings, r_s? Round your answer to two decimal places.