Business has been good for Keystone Control Systems, as indicated by the thirteenyear 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 part a, project earnings for next year (E_{1}). (Do not round intermediate calculations. Round your answer to 2 decimal places.) 
E_{1}  $ 
c. 
Assume the dividend payout ratio is 30 percent. Compute D_{1}. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 
D_{1}  $ 
d. 
The current price of the stock is $22. Using the growth rate (g) from part a and D_{1} from part c, compute K_{e}. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places..) 
K_{e}  % 
e. 
If the flotation cost is $3.00, compute the cost of new common stock (K_{n}) using growth rate (g) from part a and dividend (D_{1}) from part c. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) 
K_{n} 
%
