Business has been good for Keystone Control Systems, as indicated by the thirteen-year growth in earnings per share. The

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Business has been good for Keystone Control Systems, as
indicated by the thirteen-year growth in earnings per share. The
earnings have grown from $1.00 to $2.45.
a. Determine the compound annual rate of
growth in earnings (n = 13). (Do not
round intermediate calculations. Input your answer as a percent
rounded to 2 decimal places.)
b. Based on the growth rate determined in
part a, project earnings for next year
(E1). (Do not round intermediate
calculations. Round your answer to 2 decimal
places.)
c. Assume the dividend payout ratio is 35
percent. Compute D1. (Do not
round intermediate calculations. Round your answer to 2 decimal
places.)
d. The current price of the stock is $25.
Using the growth rate (g) from
part a and (D1) from
part c,
compute Ke. (Do not
round intermediate calculations. Input your answer as a percent
rounded to 2 decimal places.)
e. If the flotation cost is $2.50, compute
the cost of new common stock (Kn) using growth
rate (g) from part a and dividend (D1)
from part c. (Do not round intermediate calculations.
Input your answer as a percent rounded to 2 decimal
places.)