Ask Experts Questions for FREE Help !
Ask
    wwilliams24's Avatar
    wwilliams24 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Oct 3, 2007, 04:31 PM
    Cost of retained earnings
    A company's EPS was $6.50 in 2005, up from $4.42 in 2000. The company pays out 40%
    Of its earnings in dividends, and its common stock sells for $36.

    Calculate the past growth rate in earnings(This is a 5 year growth period).
    ake_finance's Avatar
    ake_finance Posts: 19, Reputation: 1
    New Member
    		  
    #2

    Oct 5, 2007, 11:08 AM
    growth rate in earning
    arithmetic means = 9.41%/yr
    geometric means = 8.02%/yr
    dividend in 2005 = 6.5 x 40%
    market price = 36
    cost of retained earning in 2005= 2.6/36 + 8.02%=15.24% (if estimated growth calculated by using geometric means )
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Retained earnings [ 2 Answers ]

During 2006, Edgemont Corporation had revenues of $230,000 and expenses, including income taxes, of $190,000. On December 31, 2005, Edgemont had assets of $350,000, liabilities of $80,000, and capital stock of $210,000. Edgemont paid a cash dividend of $25,000 in 2006. No additional stock was...

Retained Earnings [ 1 Answers ]

During 2006, Edgemont Corporation had revenues of $230,000 and expenses, including income taxes, of $190,000. On December 31, 2005, Edgemont had assets of $350,000, liabilities of $80,000, and capital stock of $210,000. Edgemont paid a cash dividend of $25,000 in 2006. No additional stock was...

View more questions Search