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Business has been good for Keystone Control Systems, as indicated by the six-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 six-year growth in earnings per share. The earnings have grown from $1.00 to $1.80.

a.

Determine the compound annual rate of growth in earnings (n = 6).(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 parta, 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 20 percent. Compute D1.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

D1 $

d.

The current price of the stock is $16. Using the growth rate (g) from partaand D1from partc, 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 %

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