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Business, 12.12.2020 17:10 leximae5391

Kahn Inc. has a target capital structure of 60% common equity and 40% debt to fund its $10 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 13%, a before-tax cost of debt of 10%, 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. a. What is the company’s expected growth rate?
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 pay out as dividends?

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Kahn Inc. has a target capital structure of 60% common equity and 40% debt to fund its $10 billion i...
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