Radon Homes' current EPS is $6.71. It was $4.43 5 years ago. The company pays out 50% of its earnings as
dividends, and the stock sells for $30.
Calculate the historical growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two decimal places.
Calculate the next expected dividend per share, D1 (Hint: D0 = 0.50($6.71) = $3.36). Assume that the past growth rate will continue. Round your answer to the nearest cent.
What is Radon's cost of equity, rs? Round your answer to two decimal places.