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What portion of its net income is the firm expected to pay

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Question - Kahn Inc. has a target capital structure of 50% common equity and 50% debt to fund its $10 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 14%, a before-tax cost 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 $31.

What is the company's expected growth rate?

If the firm's net income is expected to be $1.0 billion, what portion of its net income is the firm expected to pay out as dividends?

Reference no: EM133056647

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