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Business has been good for Keystone Control Systems, as indicated by the eleven-year growth in earnings per share. The earnings have grown from $1.00 to
Business has been good for Keystone Control Systems, as indicated by the eleven-year growth in earnings per share. The earnings have grown from $1.00 to $2.58. a. Determine the compound annual rate of growth in earnings (n = 11). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Compound annual rate of growth % b. Based on the growth rate determined in part a, project earnings for next year (E1) (Do not round intermediate calculations. Round your answer to 2 decimal places.) E1 c. Assume the dividend payout ratio is 35 percent. Compute D. (Do not round intermediate calculations. Round your answer to 2 decimal places.) D1 d. The current price of the stock is $21. Using the growth rate (g) from part a and (D) from part c, compute ke (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Ke T % e. If the flotation cost is $3.00, compute the cost of new common stock (Kn) using growth rate (g) from part a and dividend (D) from part c. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Kn % Nex
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