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?

Answer 1

21.82 % is the growth rate in earning per share over 10 years period .

Step by step solution :

Earnings per share is the monetary value of earnings per outstanding share  of common stock of 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 $\frac{1}{10} th$ power of the growth rate as it required to compute the growth rate in 10 years

7.20$\frac{1}{10}$ = 1.2182

Now , 1 is to be subtracted from the 1.2182

          1.21 - 1 = 0.2182

the final step , multiply 0.2182 by 100 to obtained the answer in percentage

    0.2182 × 100 = 21.82%

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