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Qu st' 3 e m DFB, lnc., expects earnings this year ot$5.8'i per share, and it plans to pay a $3.86 dividend to shareholders. DFB will retain $1.95 per share of its earnings to reinvest in new projects with an expected return of HE; rema'mng 14.7% per year. Suppose DFB Will maintain the same divrdend payout rate, retention rate, and return on new Investments in the future and will not change Its number of outstanding shares. 1 Points nutof a. What growth rate of earnings would you forecast for MED {2 pt, round to the nearest 10th of a percent) 7.00 F \"59 \"\"35\"\" b. If DFB's equity cost of capital is H.396, what price would you estimate for DFB stock $|:| (2 pt, round to the nearest cent) c. Suppose DFB instead paid a dividend of $4.86 per share this year and retained only $0.95 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 now? (2 pt' round to the nearest cent) d. Should DFB follow this new policy? OA. Not raise dividends because companies should always reinvest as much as possible. OE. Not raise dividends because projects have positive NPV when the return on new investments is higher than the rm's cost of capital. OC. Raise dividends because the return on new investments is lower than the cost of capital. OD. Raise dividends because, according to the dividendediscount model, doing so will always improve the share price