Question

Last year Thomson Inc's earnings per share were $3.50, and its growth rate during the prior 5 years was 11.0% per year. If that growth rate were maintained, how many years would it take for Thomson's EPS to triple?

Answer 1

Answer:

10.52 years

Explanation:

We can work out the number of years using this relationship

V =P× (1+r)^n

V= tribe valeu  = 3×3.5 = 10.5

r-growth rate -11%

n- number of years- ?

10.5 = 3.5× (1.11)^n

dividing both sides by 1.11^n

1.11^n = 10.5/3.5

taking the log of both sides

n log 1.11 = log 3

n = log 3/log 1.11

n =10.52