In its first year of operations, 1999, the Gourmet Cheese Shoppe had earnings per share (EPS) of R0.26.Four years later, in 2003, EPS was up to R0.38, and 7 years after that, in 2010, EPS was up to R0.535.It appears that the first 4 years represented a supernormal growth situation and since then a more normal growth rate has been sustained.What are the rates of growth for the earlier period and for the later period?

Question

Quizplus · Accepted Answer

The growth rate for the first period (1999 to 2003) is calculated as [(0.38/0.26)^(1/4) - 1] = 10%. The growth rate for the later period (2003 to 2010) is calculated as [(0.535/0.38)^(1/7) - 1] = 5%.

In Its First Year of Operations, 1999, the Gourmet Cheese