(Common stock valuation)Dubai Metro's stock price was at $90 per share when it announced that it will cut its dividend for next year from $7 per share to $3 per share, with additional funds used for expansion. Prior to the dividend cut, Dubai Metro expected its dividends to grow at a 4 percent rate, but with the expansion, dividends are now expected to grow at 7 percent. How do you think the announcement will affect Dubai Metro's stock price?

a. What is the investor's required rate of return for Dubai Metro's stock?_____ (Round to two decimal places.)

b. What would be the price of Dubai Metro's stock if they cut the dividend to $_______(Round to the nearest cent.)

c. How do you think Dubai Metro's stock price will react to the announcement? (Select from the drop-down menu.) If Dubai Metro were to cut the dividend, the price of the common stock will decrease or increase