l ' . Compost Science Inc. (CSI) is in the business of converting Boston's sewage sludge lute? ! fertilizer. The business is not in itself very protable. However. to lndu ce CSI to remain in; business, the Metropolitan District Commission (MDC) has agreed to pay whatever amount - 1' is necessary to yield CS] a 12% book return on equity. lit the end of the year, CSI is expected to pay a $4 dividend. It has been reinvesting 35% of earnings. A. Suppose CS! continues on this growth trend. What is the expected longrun rate of return from purchasing the stock at $9M What part of the $90 price is attributable to the present value of growth opportunities? B. How the MDC announces a plan for ES! to treat Cambridge sewage. E5l's plant will, therefore. be expanded gradually over ve years. This means that [15! will have to reinvest Mil-i: of its earnings for ve years. Starting in year Eu. however, it will again be able to pay our. d5% of earnings in dividend. What will be CSI's stock price once this announcement is made and its consequences for (:5! are known