Ten years ago, Kronan Corporation earned $0.50 per share.Its earnings this year were $2.20.What was the growth rate in earnings per share (EPS) over the 10-year period?

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Quizplus · Accepted Answer

The growth rate can be calculated using the formula for compound annual growth rate (CAGR): $$CAGR = \left(\frac{Final Value}{Initial Value}\right)^{\frac{1}{Number of Periods}} - 1$$ Here, the final value is $2.20, the initial value is $0.50, and the number of periods is 10 years. Plugging these values into the formula gives: $$CAGR = \left(\frac{2.20}{0.50}\right)^{\frac{1}{10}} - 1 = 2.44^{\frac{1}{10}} - 1 \approx 0.1597$$ or 15.97%.

Ten Years Ago, Kronan Corporation Earned $0