Question: Business has been good for Keystone Control Systems, as indicated by the four-year growth in earnings per share. The earnings have grown from $1.00 to

 Business has been good for Keystone Control Systems, as indicated by

Business has been good for Keystone Control Systems, as indicated by the four-year growth in earnings per share. The earnings have grown from $1.00 to $2.34. a. Determine the compound annual rate of growth in earnings (n = 4). (Do not round intermediate calculations. Input your answer as a percent rounded 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) (Do not round intermediate calculations. Round your answer to 2 decimal places.) E1 c. Assume the dividend payout ratio is 30 percent. Compute 01. (Do not round intermediate calculations. Round your answer to 2 decimal places.) D1 d. The current price of the stock is $11. 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.) Ke % e. If the flotation cost is $2.00, 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.) Kn %

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