DFB, Inc. expects earnings next year of $8 per share and plans to pay a $3 dividend to shareholders. DFB will retain $5 per share of its earnings to reinvest in new projects that have an expected return of 10.1% 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. Assume that the next dividend is due in one year. a. What growth rate of eamings would you forecast for DFB? b. If DFB's equity cost of capital is 12%, what price would you estimate for DFB stock? c. Suppose instead that DFB increases its dividend to $4 per share at the end of this year. That is, suppose it chooses to pay a higher dividend instead of reinvesting as much in new projects. If DFB makes this change now and maintains the higher payout rate in the future, what stock price would you estimate for the firm now? d. Should DFB invest less in order to increase its dividend? a. DFB's growth rate of earnings is 6.3 %. (Round to one decimal place.) b. If DFB's equity cost of capital is 12%, then DFB's stock price will be $ 52.75. (Round to the nearest cent.) c. If DFB instead paid a dividend of $4 per share next year and retained only $4 per share in earnings, then DFB's new stock price would be $ 5.05. (Round to the nearest cent.) d. Should DFC invest less in order to increase its dividend? OA. No