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 $2.41.

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.)

Compound annual rate of growth

%

b.	Based on the growth rate determined in parta, 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 D1.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

D1

$

d.	The current price of the stock is $22. Using the growth rate (g) from partaand D1from partc, 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 $3.00, 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

%