(Common stock valuation)Assume the following: bulletthe investor's required rate of return is 14 percent, bulletthe expected level of earnings at the end of this year (Upper E 1) is $6, bulletthe retention ratio is 40 percent, bulletthe return on equity (ROE) is 16 percent (that is, it can earn 16 percent on reinvested earnings), and bulletsimilar shares of stock sell at multiples of 7.895 times earnings per share. Questions: a.Determine the expected growth rate for dividends. b.Determine the price earnings ratio (P/Upper E 1). c.What is the stock price using the P/E ratio valuation method? d.What is the stock price using the dividend discount model? e.What would happen to the P/E ratio (P/Upper E 1) and stock price if the firm could earn 21 percent on reinvested earnings (ROE)? f.What does this tell you about the relationship between the rate the firm can earn on reinvested earnings and P/E ratios?