A restaurant chain has an investment opportunity with return (return on new investment) equals 16% forever. The required return from shareholders (or the discount rate) is 12%. Its expected earnings at the end of this year are $3 per share (EPS1 = $3). However, the investors require that the restaurant chain distributes half of its earnings as dividends every year

a. (8 points) What is the stock price of the restaurant chain today?

b. (7 points) What would be todays stock price if it pays out 100% of earnings as dividends? Is this a good change for the company?