$$DFB$,$ Inc., expects earnings at the end of this year of $ $5\mathrm{.}75$ per$$ share, and it plans to pay a $ $4\mathrm{.}07$ dividend at that time. DFB will retain $ $1\mathrm{.}68$ per share of its earnings to reinvest in new projects with an expected return of $15\mathrm{.}1\%$ per year. Suppose DFB will maintain the same dividend payout$$ rate, retention$$ rate, and return on new investments in the future and will not change its number of outstanding shares.

a$.$ What growth rate of earnings would you forecast for$$ DFB$?$

b$.$ If$$ DFB$\text{'}$s equity cost of capital is $11\mathrm{.}3\%,$ what price would you estimate for DFB stock$$ today?

c$.$ Suppose DFB instead paid a dividend of $ $5\mathrm{.}07$ per share at the end of this year and retained only $ $0\mathrm{.}68$ per share in earnings. That$$ is$,$ it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the$$ future, what stock price would you estimate$$ now? Should DFB raise its$$ dividend?