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How do you calculate growth rate (historical growth in earnings) with a financial calculator? [Chapter...

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Finance

How do you calculate growth rate (historical growth in earnings) with a financial calculator?

[Chapter 9 - p.408 - #11 a) ]

The variables are as follows:

Current EPS: $6.50

EPS 5 years ago: $4.42

40% of earnings as dividends

Stock sells for $36

We are solving from growth rate which is I/Y on the financial calculator

---

From these details, my thought would be:

N: 5

I/Y: [solving for this]

PV:

PMT:

FV:

The final answer is 8.02% for I/Y if you use the formula: EPS = previous EPS (1+g)^5 =>

$6.50 = $4.42(1+g)^5

What numbers do we fill in for the inputs above to calculate an I/Y of 8.02%?

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