In its first year of operations,1980,the Gourmet Cheese Shoppe had earning per share of $0.26.Four years later,in 1984,EPS was up to $0.38,and 7 years after that,in 1991,EPS was up to $0.535.It appears that the first four 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? (Round to the nearest whole number)
A) 6%; 5%
B) 6%; 3%
C) 10%; 8%
D) 10%; 5%
E) 12%; 7%

Question

Quizplus · Accepted Answer

i = 11ea7fdb_fc27_229e_a768_a9bc5f9e9f4d_TB2902_00 - 1
i = 11ea7fdb_fc27_49af_a768_e997eb04be8a_TB2902_00 - 1 = 10%
Using a financial calculator:
N = 4, PV = -.26, PMT = 0, FV = .38, cpt I/Y = 9.95 or 10%
i = 11ea7fdb_fc27_49b0_a768_aba2464d6c4a_TB2902_00 - 1
i = 11ea7fdb_fc27_49b1_a768_d544d6631196_TB2902_00 - 1 = 5%
Using a financial calculator:
N = 7, PV = -.38, PMT = 0, FV = .535, cpt I/Y = 5%

In Its First Year of Operations,1980,the Gourmet Cheese Shoppe Had