Brockman Corporation's earnings per share were $3.50 last year, and its growth rate during the prior 5 years was 9.0% per year. If that growth rate were maintained, how many years would it take for Brockman's EPS to triple

12.75 years

Explanation:

Solution

Recall that:

The earnings of Brockman Corporation per share is = $3.50

The growth rate in 5 years = 9.0%

Now,

We apply this formula which is stated below:

A=P (1+r/100) ^n

P = present value

n = period of time

r = the rate of interest

Thus,

(3*3.5) = 3.5 * (1.09) ^n

3 = (1.09) ^n

By applying long on either side we have the following

log 3=n*log (1.09)

n=log 3/log (1.09)

Approximately, this is equal to = 12.75 years

Therefore, it will take Brockman's EPS to triple in 12.75 years.