Sam's Fine Garments sells jackets and sports coats in suburban malls throughout the country. Business has been good, as indicated by the eleven-year growth in earnings per share. The earnings have grown from $1.00 to $3.83.(Use a Financial calculator to arrive at the answers.)

a.Determine the compound annual rate of growth in earnings (n= 11). UseAppendix A.(Round the final answer 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).(Round compound annual rate of growth to 2 decimal places. Round the final answer to 2 decimal places.)

E₁$

c.Assume the dividend payout ratio is 10 percent. ComputeD₁.(Round intermediate calculations to 2 decimal places. Round the final answer to 2 decimal places.)

D₁$

d.The current price of the stock is $13. Using the growth rate(g)from part a andD₁from part c, computeK_e.(Round compound annual rate of growth to 2 decimal places. Round the final answer to 2 decimal places.)

K_e%

e.If the flotation cost is $1.75, compute the cost of new common stock(K_n).(Round compound annual rate of growth to 2 decimal places. Round intermediate calculations to 2 decimal places. Round the final answer to 2 decimal places.)

K_n%