I have Finance final coming up and this is one of the practice problems on the professors worksheet. My study group is getting different answers on this, so any help would be appreciated!

Your thinking about investing $100,000 into one of two stocks. Both stocks are in the same industry sector and are priced at the same market capitalization rate of 12%. Stock A is expected to pay out a $1.25 annual dividend and that dividend is not expected to grow. Stock B is expected to pay out an annual dividend of $2.45. Stock B retains some of its earnings and reinvests at a good ROE.

Assuming that the two stocks are correctly priced, which is the better investment?