Business has been good for Keystone Control Systems, as indicated by the four-year growth in earnings per share. The earnings have grown from $1.00 to $3.51.

a.	Determine the compound annual rate of growth in earnings (n = 4). (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 45 percent. Compute D1. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

D1

$ ?

d.	The current price of the stock is $20. Using the growth rate (g) from part a and D1 from part c, compute Ke. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places..)

Ke

? %

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 (D1) from part c. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Kn

? %