2. Durable.Co has ROE of 6% and \$6 Earnings per Share this year. The company currently reinvests a half its profits and pays out the other half as dividends. You expect the company to do so in the future. This year, the company paid out $3 dividend per share and it is expected to grow at the annual rate of 3% (sustainable growth rate = ROE* plowback ratio). 1) Given the information, how much would you pay for the company's stock? Similar stocks provide the annual return of 4%. 2) Some shareholders argue that the shareholders can benefit if the company reinvests more and therefore grow faster. Do you agree? Calculate the price of the stock when the company reinvests 80% of its profits and provide an explanation on why the stock price changed the way it did when the company's reinvestment ratio (plowback ratio) changed