Business has been good for Keystone Control Systems, asindicated by the four-year growth in earnings per share. Theearnings have grown from $1.00 to $1.63.
b. Based on the growth rate determined in part a, projectearnings for next year (E1). (Do not round intermediatecalculations. Round your answer to 2 decimal places.)
c. Assume the dividend payout ratio is 40 percent. Compute D1.(Do not round intermediate calculations. Round your answer to 2decimal places.)
d. The current price of the stock is $50. Using the growth rate(g) from part a and (D1) from part c, compute Ke. (Do not roundintermediate calculations. Input your answer as a percent roundedto 2 decimal places.)
e. If the flotation cost is $3.75, compute the cost of newcommon stock (Kn) using growth rate (g) from part a and dividend(D1) from part c. (Do not round intermediate calculations. Inputyour answer as a percent rounded to 2 decimal places.)
Business has been good for Keystone Control Systems, as indicated by the four-year growth in earnings per share. The ear
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