Omnl Telecom is tryling to decide whether to Increase its cash dividend Immediately or use the funds to increase its future growth rate.

$P_0=\frac{L_1}{K_{e}g}$

$P_0=$ Price $of$ the stock today

$L_1=$ Dividend $at$ the end $of$ the first year

$L_1=L_0(1+g)$

$D_0=$ Dividend today

$K_e=$ Requlred rate $of$ return

$g=$ Constant growth rate $in$ dividends

$D_0$ is currently $$2\mathrm{.}80,K_e$ is $12$ percent, and $g$ is $6$ percent.

Under Plan A$,D_0$ would be Immedlately Increased to $$3\mathrm{.}20$ and $K_e$ and $g$ will remain unchanged.

Under Plan B$,D_0$ will remain at $$280$ but $g$ will go up to $7$ percent and $K_c$ will remaln unchanged.

a$.$ Compute $H_0($price of the stock today$)$ under Plan A$.$ Note $D_1$ will be equal to $D_0(1+g)$ or $$3\mathrm{.}20(1\mathrm{.}06).K_e$ will equal

$12$ percent, and $g$ will equal $6$ percent.

Note: Round your intermedlate calculations and final answer to $2$ decimal places.

b$.$ Compute $H_0($price of the stock today$)$ under Plan $B.$ Note $D_1$ will be equal to $D_0(1+g)$ or $$2\mathrm{.}80(1\mathrm{.}07).K_e$ will be

equal to $12$ percent, and $g$ will be equal to $7$ percent.

Note: Round your intermedlate calculations and final answer to $2$ decimal places.

Stock price for Plan B

c$.$ Which plan will produce the higher value?

Plan A

Plan B