The Phillips Tractor Inc. Companys EPS in 2020 was $2.00. EPS in 2000 was $1.3612. The company pays out 40% of its earnings as dividends, and the stock currently sells for $21.60. The company expects earnings of $10 million in 2021. Its optimal market value debt/assets ratio is 60%, and the firm has no preferred stock outstanding.

a. Calculate the firms growth rate in earnings.

b. Calculate the firms dividend per share expected in 2021. Assume that the growth rate calculated in (a) will continue.

c. What is the firms cost of retained earnings?

d. The sale of new stock would net the company $18.36 per share. What is the firms percentage of floatation cost? What is the cost of the new common stock?