Gamma Power Solutions (GPS) manufactures products for the clean energy market such as solar panels and wind turbines. It expects to have earnings per share of $108 in the coming year Rather than reinvest these earnings and grow, the firm plans to pay out all of its earnings as a dividend. GPS current share price is $600. The management is examining the impact of alternative payout policies. Policy 1: Suppose GPS could cut its dividend payout rate to 50% for the foreseeable future and use the retained earnings to develop batteries for electric cars. The return on its investment is expected to be 15%. Policy 2: Suppose GPS could cut its dividend payout rate to 75% for the foreseeable future and use the retained earnings to develop aircraft engines (turbines) that run on hydrogen. The return on its investment is expected to be 20%. a) If we assume that the risk of this new investment is the same as the risk of its existing investments, then the firms equity cost of capital is unchanged. What effect would each of the above policies have on GPS stock price? (7 points) b) In the context of this question, is investing in all growth opportunities in the best interest of the shareholder? Explain.