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Question 18 10 pts Problem Set 4 (Questions 16, 17, 18 & 19 below are based on PS4, Question 7.16) PS4. Question 7 16. Common Part: DFB Inc, expects earnings this year of $5 per share, and it plans to pay a $3 dividend to shareholders. DFB will retain 52 per share of its corning to reinvest in new projects that have an expected return of 15% per year. Suppose DFB will maintain the same dividend payout rote, retention rate & return on new investments in the future and will not change its number of outstanding shares. Question: Suppose instead that DFB paid a dividend of $4 per share this year and retained only $1 per share in earnings. That is it chose to pay higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now if DFB's equity cost of capital is 12%? $45.78 $55.56 $44.44 $33.33