Kahn Inc, has a target capital structure of45% common equity and 55% debt to fund its$9 billion in operating assets. Futhermore, kahaInc. has a WACC of 16%, a before-tax castof debt of 11%, and a tax rate of 25%. TheCompany's retained earnings are adequate toprovide the common equity portion of its capitalbudget. Its expected dividend next year (D1) is$3, and the current stock price is $28.+a). what is the company's expected growthvate?۰/b). If the firm's net income is expected to be$1.6 billion, what portion of its net income isthe from expected to pay out as dividends?Growth rate - (1- Pazout ratio) ROE%((

Growth Rate:The growth rate, often referred to as the "earnings growth rate" or "revenue growth…

Answered: a). What is the company's expected…

a). What is the company's expected growth vate? % b). If the firm's net income is expected to be $1.6 billion, what portion of its net income is the firm expected to раз out as dividends ?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 11P

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Question

Kahn Inc, has a target capital structure of
45% common equity and 55% debt to fund its
$9 billion in operating assets. Futhermore, kaha
Inc. has a WACC of 16%, a before-tax cast
of debt of 11%, and a tax rate of 25%. The
Company's retained earnings are adequate to
provide the common equity portion of its capital
budget. Its expected dividend next year (D1) is
$3, and the current stock price is $28.
+
a). what is the company's expected growth
vate?
۰/
b). If the firm's net income is expected to be
$1.6 billion, what portion of its net income is
the from expected to pay out as dividends?
Growth rate - (1- Pazout ratio) ROE
%
((

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