Question: Kahn Inc. has a target capital structure of 60 percent common equity and 40 percent debt to fund its $10 billion in operating assets. Further-more, Kahn Inc. has a WACC of 13 percent, a before-tax cost of debt of 105, and a tax rate of 40%. The firm'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.
Calculate the firm's expected growth rate?