Lincoln Umbrellas, Inc. today expects to earn $8.50 per share for each of the future operating periods (beginning at Time 1), today if the firms makes no new investments and returns the earnings as dividends to the shareholders. However, Brian Jones, president and CEO, has discovered an opportunity to retain and invest 20 percent of the earnings beginning three years from today. This opportunity to invest will continue for each period indefinitely. He expects to earn 10 percent on this new equity investment, the return beginning one year after each investment is made. The firms equity discount rate is 12 percent.

• WhatisthepricepershareofLincolnUmbrellas,Inc.stockwithoutmakingthenewinvestment?
• If the new investment is expect to be made, per the preceding information, what would the price of the stock be now?