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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 9.001%, 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 30 percent. Compute D1. (Do not round intermediate calculations. Round your answer to 2 decimal places.) D1 d. The current price of the stock is $19. 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 3 e. If the flotation cost is $2.00, compute the cost of new common stock (Ka) 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
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