Net income is the firm expected to pay out as dividends

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Reference no: EM132024969

Kahn Inc. has a target capital structure of 70% common equity and 30% debt to fund its $10 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 16%, a before-tax cost of debt of 8%, 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 $2 and the current stock price is $20. What is the company's expected growth rate? Round your answer to two decimal places at the end of the calculations. % If the firm's net income is expected to be $1.9 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 Round your answer to two decimal places at the end of the calculations. %

Reference no: EM132024969

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