Big Bags has seen their EPS increase from 030 to 316 in seve

Big Bags has seen their EPS increase from $0.30 to $3.16 in seven years. What has been the growth rate of Big Bag’s EPS?

A. about 40%

B. about 10%

C. about 20%

D. about 30%

Johnson Repair has purchased a piece of equipment costing $100,000. It is expected to generate a ten-year stream of benefits amounting to $16,273 per year. Determine the rate of return Johnson expects to earn from this equipment.

A. 20%

B. 10%

C. 16.3%

D. 62.7%

Solution

growth rate of Big Bag’s EPS

Answer is about 40%

We need use Fianance Calculator to find Rate

NPER = 7

PMT =0

PV=-.30

FV =3.16

=RATE(7,0,-0.3,3.16,0,0)

=40%

2

Rate of return Johnson expects to earn

Answer is 10%

NPER = 10

PMT =16273

PV=-100000

FV =0

=RATE(10,16273,-100000,0,0,0)

=10%