Note the following information regarding Sunnyfax Publishing:

a) Currently it pays out all its earnings of $3 per year (EPS and dividends are constant) and has a share price of $38. What is the equity cost of capital? $

b) In order to expand, Sunnyfax Publishing is considering a proposal that would retain and re-invest a third of its earnings each year. The re-investment will yield a return of 12.4%. If the reinvestment does not affect Sunnyfax's equity cost of capital, what is the expected share price as a consequence of this decision? $