Gentleman Gyms common stock just paid its annual dividend of $3 per share, and it is widely expected that the dividend will increase by 5 percent per year indefinitely. The risk-free rate is 3 percent and the market risk premium is 6 percent.

(a) What price should Gentleman Gyms common stock sell for today if it has a equity of 2.0?

(b) How would your answer change if Gentleman Gyms equity were 1.5?