Problem 18-16 Dividend valuation model and wealth maximization (L018-2] Omni Telecom is trying to decide whether to increase its cash dividend immediately or use the funds to increase its future growth rate. PO D1 Po = Price of the stock today D1 = Dividend at the end of the first year D1 = De *(1 + 9) Da = Dividend today Ke=Required rate of return g=Constant growth rate in dividends De is currently $2.80, Ke is 12 percent, and gis 5 percent. Under Plan A. Dg would be immediately increased to $3.40 and Ke and g will remain unchanged. Under Plan B, De will remain at $2.80 but g will go up to 6 percent and Ke will remain unchanged. a. Compute Pe (price of the stock today) under Plan A. Note Du will be equal to De * (1 + g) or $3.40 (1.05). Ke will equal 12 percent. and g will equal 5 percent. (Round your intermediate calculations and final answer to 2 decimal places.) Stock price for Plan A b. Compute Pe (price of the stock today) under Plan B. Note D1 will be equal to Do * (1 + g) or $2.80 (1.06). Ke will be equal to 12 percent, and will be equal to 6 percent. (Round your intermediate calculations and final answer to 2 decimal places.) Stock price for Plan B