Business has been good for Keystone Control Systems, as indicated by the eleven-year growth in earnings per share. The earnings have grown from $1.00 to $2.58.

a. Determine the compound annual rate of growth in earnings (n = 11). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

9.00%

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.)

$2.81

c. Assume the dividend payout ratio is 30 percent. Compute D1. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

$0.84

d. The current price of the stock is $19. 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.)

13.44%

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.

Kn _____%

Need help with e, please.