Question: HELP PLEASE THANK YOU SO MUCH :) DFB, Inc. expects earnings next year of $5.67 per share, and it plans to pay a $3.34 dividend

HELP PLEASE THANK YOU SO MUCH :) DFB, Inc. expects earnings nextyear of $5.67 per share, and it plans to pay a $3.34HELP PLEASE THANK YOU SO MUCH :)

DFB, Inc. expects earnings next year of $5.67 per share, and it plans to pay a $3.34 dividend to shareholders (assume that is one year from now). DFB will retain $2.33 per share of its earnings to reinvest in new projects that have an expected return of 15.6% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 11.2%, what price would you estimate for DFB stock? c. Suppose instead that DFB paid a dividend of $4.34 per share at the end of this year and retained only $1.33 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? Should DFB raise its dividend? a. What growth rate of earnings would you forecast for DFB? DFB's growth rate of earnings is %. (Round to one decimal place.) Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 83 basis points (0.83%). Your firm's five-year debt has an annual coupon rate of 6.1%. You see that new five-year Treasury notes are being issued at par with an annual coupon rate of 1.7%. What should be the price of your outstanding five-year bonds? The price of the bond is $ (Round to the nearest cent.)

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