5. (15 points) David is getting nervous about his stock holding in DeAngelisCo. He bought the stock 11 years ago at $20 per share and the price is now $83.50 per share. DeAngelisCo. has a policy of paying out 50 percent of its earnings in dividends and David expects the company to continue earning a 12 percent return on equity. Over the past 12 months, DeAngelisCo. paid $2.75 in dividends. Assume the discount rate for DeAngelisCo. is 14%. a) Based on Davids projections, is the stock overpriced at $83.50 per share? b) Assume Davids projections are correct. Should the firm increase or decrease their payout ratio? Explain your answer.