Question: complete the problems using excel formula P.18: Costs of retained earnings and new common stock (LO11-3) Business has been good for Keystone Control Systems, as
P.18: Costs of retained earnings and new common stock (LO11-3) Business has been good for Keystone Control Systems, as indicated by the fouryear growth in earnings per share. The earnings have grown from $1.00 to $1.63. a. Determine the compound annual rate of growth in earnings (n=4). b. Based on the growth fate determined in part , project earnings for next year (En,1). Round to two places to the right of the decimal point. c. Assume the dividend payout ratio is 40 percent. Compute D1. Round to two places to the right of the decimal point. d. The current price of the stock is $50. Using the growth rate (g) from part a and (D1) from part c, compute K,. e. If the flotation cost is $3.75, compute the cost of new common stock (Kn)
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