Question

Lakeland Corporation earned $0.50 per share ten year ago. This year its earnings per share were $2.20. What was the growth rate in Lakeland’s earnings per share over the ten year period?

Answer 1

Let, EPS₀ = $0.5

and EPS₁₀ = $2.20

EPS₁₀ = EPS₀*(1+g)^T

Where g = growth rate

T = time period

Therefore,

2.2 = 0.50*(1+g)¹⁰

(1+g)¹⁰ = 2.2/0.50

(1+g) = (4.4)^1/10

g = 1.1597-1

g = 0.1597 or 15.97%

Therefore, growth rate over the ten year period was 15.97%.