all one question

Problem Set 4 (Questions 16, 17, 18 & 19 below are based on PS4, Question 7.16) PS4. Question 2.16 Common Part: DFB Inc, expects earnings this year of $5 per share, and it plans to pay a $3 dividend to shareholders. DFB will retorn $2 per shore of its earnings to reinvest in new projects that have an expected retum of 15% per year. Suppose Ofe will maintain the same dividend payout rate, retention rate, & return on new investments in the future and will not change its number of outstanding shares Question: What growth rate of earnings would you forecast for DFB? If DFB's equity cost of capital is 12%, what price would you estimate for DFB stock? Suppose instead that DFB paid a dividend of 54 per share this year and retained only $1 per share in earnings. That is, it chose to pay a 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%? Suppose instead that DFB paid a dividend of $4 per share and repurchased $1 worth of stock this year. If DFB maintains this payout rate in the future, what stock price would you estimate for the firm now if DFB's equity cost of capital is 12%