DFB, Inc. expects earnings next year of $4.25 per share, and it plans to pay a $2.64 dividend to shareholders (assume that is one year from now). DFB will retain $1.61 per share of its earnings to reinvest in new projects that have an expected return of 15.6% 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. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 11.7%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $3.64 per share at the end of this year and retained only $0.61 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 for the firm now? Should DFB raise its dividend? a. What growth rate of earnings would you forecast for DFB? DFB's growth rate of earnings is %. (Round to two decimal places.)

DFB, lne. expects earnings next year of $4.25 per share, and at plans to pay a $2.64 dividend to thareholders (assume that is one year trom now). DFB wil retain 31.61 per ahare of its earings to reinvest in new prolects that have an expected return of 15,6% per year. Suppose DFB will maintain the same dividend payout rate, relention rate, and return on new invatrments in the fhare and will not change ta number of outstanding shares. Assume next diviend is due in one year. a. What growth rate of eamings would you forecast for DFB? b. U DFB's equily cost of caphal is 11.7\%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $3. .4 per share of the end of this year and retained only 50.61 per ahare in earninge. That is, it chose to pay a higher dividend instead of a. What growth rate of eamings would you forecast for of A? bFBre growth rate of eamings is \%. (Round to two decimal places)