Kahn Inc. has a target capital structure of 65% common equity and 35% debt to fund...

Kahn Inc. has a target capital structure of 65% common equity and 35% debt to fund its $10 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 16%, a before-tax cost of debt of 12%, and a tax rate of 40%. 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 $35.

What is the company's expected growth rate? Do not round intermediate calculations. Round your answer to two decimal places.
%
If the firm's net income is expected to be $1.8 billion, what portion of its net income is the firm expected to pay out as dividends? (Hint: Refer to Equation below.)

Growth rate = (1 - Payout ratio)ROE

Do not round intermediate calculations. Round your answer to two decimal places.
%

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jeff jeffy answered 1 year ago

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