Kahn Inc. has a target capital structure of 45% common equity and 55% debt to fund its $12 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 14%, a before-tax cost of debt of 12%, and a tax rate of 25%. The company's retained earnings are adequate to provide the common equity portion of its capital budget. Its expected dividend next year (D1) is $3, and the current stock price is $26.

a. What is the company's expected growth rate?

b. If the firm's net income is expected to be $1.0 billion, what portion of its net income is the firm expected to pay out as dividends?