Kahn Inl. has a target capital structure of 60% common equity and 40% debt to fund its $10 billion in operationg assets. Futuremore, 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 growing rate ?
b) If the firm's net income is expected to be $ 1.1 billion, what portion of its net income is the firm expected to pay out as dividends?