Question

Ten years ago, Lucas Inc. earned $0.50 per share. Its earnings this year were $3.60. What was the growth rate in earnings per share (EPS) over the 10-year period? a. 23.57% b. 21.82% c. 26.19% d. 16.80% e. 18.77%

Answer 1

21.82 %

Step-by-step explanation:

Earnings per share is the monetary value of earnings per outstanding share of common stock for a company

Growth multiple = EPS in current year / EPS of 10th year before

Growth multiple = $3.60/ $0.50

Growth multiple = 7.20

Next, raise the 1/10th power of the growth rate as it is required to compute the growth rate in 10 years

(7.20)1/10 = 1.2182

Now, 1 is to be subtracted from the figure obtained that is 1.2182

1.21 – 1 = 0.2182

In the final step, multiply 0.2182 by 100 to obtain the answer in percentage which is as follows:

0.2182 * 100 = 21.82 %