Compost Science, Inc. (CSI) is in the business of converting Boston's sewage sludge into fertilizer. The business is not in itself very profitable. However, to induce CS to remain in business, the Metropolitan District Commission (MDC) has agreed to pay whatever amount is necessary to yield CSI a 10% book return on equity. At the end of the year CSI is expected to pay a $4 dividend. It has been reinvesting 40% of earnings. The current market price of CSI is $20. Now the MDC announces a plan for CSI to treat Cambridge sewage. CSI's plant will, therefore, be expanded gradually over two years (year 1 and year 2). This means that CSI will have to reinvest 90% of its earnings for two years. Starting in year 3, however, it will again be able to pay out 60% of earnings. and this will last forever. Question: What will be CSI's stock price once this announcement is made and its consequences for CSI are known? 15.76 47.11 40.46 98.26 45.68 16.22