In its first year of operations,1999,the Gourmet Cheese Shoppe had earnings per share (EPS)of $0.26.Four years later,in 2003,EPS was up to $0.38,and 7 years after that,in 2010,EPS was up to $0.535.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 Shoppe Had