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?

Question

Quizplus · Accepted Answer

The growth rate can be calculated using the formula for compound annual growth rate (CAGR): $$CAGR = \left( \frac{Ending\ Value}{Beginning\ Value} \right)^{\frac{1}{Number\ of\ Periods}} - 1$$ Substituting the given values: $$CAGR = \left( \frac{3.60}{0.50} \right)^{\frac{1}{10}} - 1 = 2^{1/10} - 1 \approx 0.2182\ or\ 21.82\%$$

Ten Years Ago,Lucas Inc