Radon Homes' current EPS is $6.50. It was $4.42 5 years ago. The company pays out 40% of its earnings as dividends, and the stock sells for $36.
a. Calculate the past growth rate in earnings.
b. Calculate the next expected dividend per share. Assume that the past growth rate will continue.
c. What is the cost of equity (Rs) for Radon Homes?