Ten years ago, Lucas Inc. earning $0.45 per share. Its earnings this year were $2.28. What was the growth rate in earnings per share (EPS) over the 10-year period?
15.17% / 15.97% / 16.77% / 17.62% / 18.49%
Option (d) is correct
Here we will use the following formula:
FV = PV * (1 + r%)n
where, FV = Future value = $2.28, PV = Present value = $0.45, r = rate of interest, n= time period = 10
now, putting theses values in the above equation, we get,
$2.28 = $0.45 * (1 + r)10
$2.28 / $0.45 = (1 + r)10
5.06667 = (1 + r)10
(5.06667)1/10= 1 + r
1.1761757 = 1 + r
r = 1.1761757 - 1
r = 0.1762 or 17.62%
So, growth rate was 17.62%
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