Kahn Inc has a target capital structure of 60 common equity and 40 debt to fund its $11 billion in operating assets Furthermore, Kahn Inc has a WACC of 16 , 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 (D 1 ) is $3, and the current stock price is $31 What is the company's expected growth rate Do not round intermediate calculations Round your answer to two decimal places 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 Do not round intermediate calculations Round your answer to two decimal places (Hint Refer to Equation below ) Growth rate (1 Payout ratio)ROE

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Posted on Oct 02, 2024

Kahn Inc. has a target capital structure of 60% common equity and 40% debt to fund its $11 billion in operating assets. Furthermore, Kahn Inc.

Kahn Inc. has a target capital structure of 60% common equity and 40% debt to fund its $11 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 16%, 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 $31.

What is the company's expected growth rate? Do not round intermediate calculations. Round your answer to two decimal places.

%
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? Do not round intermediate calculations. Round your answer to two decimal places. (Hint: Refer to Equation below.)

Growth rate = (1 - Payout ratio)ROE

%